Volkswagen engineer pleads guilty to charges tied to emissions scandal

James Liang accused of designing, using defeat device for emissions tests

A Volkswagen engineer pleaded guilty Friday in Detroit federal court to criminal charges tied to an emissions cheating scandal which has cost the automaker billions of dollars. 

German national James Robert Liang is accused of being the engineer at the center of Volkswagen's diesel emissions scandal. Liang has been with the German automaker since 1983. He worked in VW's Diesel Development Department in Germany from 1983 to May 2008. He was part of a team of engineers that developed the diesel engine which has become the subject of an emissions test cheating controversy.

Federal prosecutors charge Liang led a team of engineers that after 2008 designed and implemented a defeat device allowing certain VW engines to pass emissions tests, but only while being tested. During normal operations of the vehicle, the engines emitted nitrogen oxide 40 times higher than U.S. EPA standards. 

Liang has pleaded guilty to conspiracy to defraud the United States, violating the clean air act, and a wire fraud count. He could face 5 years in prison. He is cooperating with the federal government, which could reduce his jail time. His sentence won't be learned until January. 

View: Liang indictment
View: Liang's plea agreement

Liang's attorney spoke outside federal court on Friday: 

Mr. Liang came to Detroit today to accept responsibility for his actions. He is one of many people at Volkswagen who got caught up in this emissions scandal and he’s very remorseful for what occurred."

Emissions tests done in Ann Arbor

Liang moved to the U.S. in May to lead the Volkswagen Diesel Competence team. The tests took place in Ann Arbor at an EPA testing lab, which is why the charges were announced in Detroit federal court. The feds say Liang was emailing colleagues in Germany while he was committing the crimes in the United States.

Earlier this year, The Wall Street Journal reported:

In 2006, Volkswagen engineer James Liang developed a defeat device for a Jetta diesel car and eight years later conducted tests to help conceal emissions-cheating, according to the lawsuit. Oliver Schmidt, who headed Volkswagen’s U.S. regulatory compliance office in 2014 and early 2015 also played a key role in the deception, the lawsuit alleged. 

This is the first criminal indictment announced against an executive with Volkswagen tied to the emissions scandal. It is believe this could send shockwaves throughout Volkswagen because of Liang's willingness to plead guilty and cooperate with U.S. federal investigators.

VW vehicles rigged to cheat on emissions tests

The German auto giant falsified pollution tests by installing software (aka "defeat devices") to make vehicles appear cleaner than they were. Once on the road, the cars would pump out as much as 40 times the allowed level of nitrogen oxides.

The cost of Volkswagen's emissions scandal has been climbing all summer. The company agreed on compensation for the dealerships that had diesel VW cars on their lots that turned out to be rigged to cheat on emissions tests.

The deal announced in August involves 652 American car dealers. Volkswagen has agreed to give out cash payments for the "unfixable, used diesel vehicles" on their lots, according to Hagens Berman, the law firm representing the dealerships.

The exact dollar figure of the settlement was not immediately released. Under the proposed settlement, VW will pay up within 18 months.

The terms of the proposed settlement were expected to be finalized by the end of September and are subject to approval by a federal judge.

Since it was revealed in September 2015 that millions of diesel Volkswagen cars worldwide had been rigged to cheat emissions tests, the automaker has grappled with an onslaught of lawsuits and legal probes. 

This deal with U.S. retailers is the latest expensive settlement for the company.

In June, the German automaker settled consumer lawsuits and government allegations that it cheated on emissions tests by taking steps that will cost the company $14.7 billion.

STORY: VW reaches $15 billion emissions settlement

Under the settlement, Volkswagen has to pay just more than $10 billion to either buy back the cheating diesel vehicles or repair them. It also will pay owners from $5,100 to $10,000 for their trouble. The German company also has to pay governments $2.7 billion for environmental mitigation and spend another $2 billion for research on zero-emissions vehicles in the U.S.

Lawyers say it's the largest auto-related consumer class-action settlement in U.S. history.

About the Authors:

Rod Meloni is an Emmy Award-winning Business Editor on Local 4 News and a Certified Financial Planner™ Professional.

Dave Bartkowiak Jr. is the digital managing editor for ClickOnDetroit.