Oliver Schmidt, one of seven Volkswagen AG executive charged with crimes in the U.S. related to the maker’s diesel-emission rigging scandal, will remain in custody after judge agreed with prosecutors that he was a flight risk.
Schmidt, who worked at VW’s engineering center in Auburn Hills, Michigan before the scandal came to light, was arrested in January in Miami as he was traveling from Cuba to Germany. The ruling, which confines Schmidt to his home in Michigan, came despite more than $1.6 million in cash and assets were raised by family and friends for bail.
“The allegations of fraud and conspiracy in this case are very, very serious,” Judge Sean Cox of the U.S. District Court for Eastern Michigan, said, according to Reuters. “There is a serious risk that Mr. Schmidt will not appear in this case.”
The former VW manager’s attorneys argued that Schmidt, who was cooperating with the FBI in its investigation, has been transparent when it came to his travel plans prior to being arrested in January, even though he knew he could be – and was eventually – charged.
(Volkswagen manager arraigned on diesel charges in Detroit. For the story, Click Here.)
“This is hardly the action of someone who was trying to avoid the jurisdiction” of the United States,” David DuMouchel, Schmidt’s attorney, said, Reuters reported. “All he had to do was stay home.”
However, prosecutors noted that Schmidt’s ties to the U.S. were few and tenuous. Additionally, Germany’s constitution doesn’t allow its citizens to be extradited and with those two facts as the lynchpin, Cox agreed to require he be confined to his home in the U.S. until his hearing next year. He must also wear an electronic tether.
Schmidt is accused of being part of a collaborative effort to intentionally develop a device that could cheat on U.S. emissions test. He’s been charged with 11 felony counts and faces more than 150 years in prison.
(VW bill rises to $25 billion in the U.S. Click Here to see how.)
The “cheat devices” allowed VW’s diesels to pass emissions tests in a lab, but then would shut off when the vehicles weren’t in “test mode.” This allowed for better fuel economy results, but the emissions levels could be as high as 40 times what’s allowable by law.
Formerly the general manager that worked with U.S. regulatory agencies from 2012 to February 2015, Schmidt returned to Germany at that time, then left the company that fall.
Related to the investigation, Volkswagen AG pleaded guilty to three felony counts last week as part of a plea agreement to resolve U.S. charges it related secret software used to beat emissions tests.
The pleas were a first for Volkswagen, which had never pleaded guilty criminal charges before, VW officials noted at the time. Cox accepted the guilty pleas to conspiracy to commit fraud, obstruction of justice and entry of goods by false statement charges. However, he said he’d like “a little more time” to consider a motion made behalf of vehicle owners who would like restitution to be higher.
(To see more about VW’s guilty pleas, Click Here.)
Despite the Justice Department and VW’s arguments that the agreement was in place and should be enough, Cox said he will consider the new motion and set an April 21 sentencing date. “This a very, very, very serious crime. It is incumbent on me to make a considered a decision,” Cox said during the hearing.
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