Dieselgate: VW engineer in US gets 40 months' jail, fine

An engineer at Volkswagen AG was sentenced on Friday to 40 months in prison for his role in the German automaker's decade-long scheme to cheat on federal emissions tests for diesel-powered cars sold in the United States.

US District Court Judge Sean Cox also ordered the engineer, James Liang, to pay a $200,000 fine, 10 times the amount sought by federal prosecutors. Cox said he hoped the prison sentence and fine would deter other auto industry engineers and executives from similar schemes to deceive regulators and consumers.

Liang was part of a long-term conspiracy that perpetrated a "stunning fraud on the American consumer," Cox said, as the defendant's family looked on in the courtroom. "This is a very serious and troubling crime against our economic system."

He is the first company employee sent to prison in the vast scandal that has tainted Volkswagen's reputation and cost it more than $20 billion in fines and settlements with consumers.

Liang, who helped develop the software that concealed high levels of pollutants generated by Volkswagen's diesel engines, reached a plea deal with prosecutors last year after agreeing to assist in the government's investigation of the company.

But even after that pledge, Liang received a harsher sentence than the government recommended for pleading guilty to conspiracy to defraud the United States and violating the Clean Air Act.

Prosecutors last week recommended that Liang, 63, receive a three-year prison sentence, reflecting credit for his months of cooperation with the US investigation of Volkswagen's diesel emissions fraud.

But Judge Cox of the US District Court for the Eastern District of Michigan gave Liang a longer sentence, as well as two years of supervised release and the fine.

In September 2015, Volkswagen was accused of evading emissions standards in the US. The scandal has hit the company hard.

Volkswagen pleaded guilty in March to three felony charges under an agreement with prosecutors to resolve the U.S. criminal probe of the company itself. It agreed to spend as much as $25 billion in the United States to resolve claims from owners and regulators and offered to buy back about 500,000 vehicles.

The judge said Liang and other Volkswagen executives and employees were responsible for a ''massive and stunning fraud'' that violated the trust that consumers need to have in goods and services purchased from corporations.

''This is a very serious and troubling crime against our economic system,'' he said. ''Without that trust in corporate America, the economy can't function.''

Liang, a German citizen, declined to address the judge at the sentencing. His lawyer, Daniel Nixon, portrayed the long-time engineer as remorseful for the crimes that made him the ''worldwide face'' of the emissions scandal.

''He was not the mastermind, but he did play a role,'' Nixon said, adding that Liang never benefited financially from aiding in the development of so-called defeat devices that masked the high levels of harmful diesel emissions.

But the judge said Liang was ''too loyal'' to the German automaker he had worked for since the 1980s, and unwilling to expose its deceptive practices or walk away from his $350,000-a-year job.

Volkswagen admitted that 11 million of its vehicles were equipped with software that was used to cheat on emissions tests. This is how the technology works and what it now means for vehicle owners.

Although his cooperation with investigators has helped the government's cases against the company and other Volkswagen executives, the judge said it was not enough to allow Liang to be sentenced to home confinement, as his lawyer had requested.

''Your cooperation and regret is noted, but it doesn't excuse the conduct,'' the judge said.

Volkswagen has already pleaded guilty to charges of conspiracy to commit wire fraud and to violate the Clean Air Act, as well as customs violations and obstruction of justice.

The company agreed to pay $4.3 billion in civil and criminal penalties in the case brought by the Justice Department. The penalties were part of $22 billion in settlements and fines that Volkswagen is paying in connection with the cheating scandal.

Others indicted
Six other Volkswagen executives have been indicted in the case, as well as one employee of the automaker's Audi luxury division.

One of the executives, Oliver Schmidt, has also reached a plea agreement with prosecutors.

Schmidt, the former head of Volkswagen's environmental and engineering center in Michigan, has been held without bail in prison since his arrest in January. Earlier this month, he pleaded guilty to conspiracy to defraud the federal government and violating the Clean Air Act.

Schmidt, who is to be sentenced in December, faces up to seven years in prison.

The German automaker declined to comment on Liang's sentence on Friday. "Volkswagen continues to cooperate with investigations by the Department of Justice into the conduct of individuals.

It would not be appropriate to discuss personnel matters," the company said in a statement.