Feds Probe GM Over Ignition Problem Bankruptcy Fraud

Tyler Durden's picture

Not only is GM facing record high inventories of slow-to-sell cars and the recall of million sof its cars (and a sale halt), Reuters reports that the terrible ignition switch problem - that has caused 13 deaths - may have been known about (and not disclosed) prior to the bankruptcy (and subsequent taxpayer bailout). The Justic Department is investigating whether GM understated (or hid) the information from regulators and committed bankruptcy fraud.

 

 

Via Reuters,

Federal authorities are investigating whether General Motors hid an ignition switch defect when it filed for bankruptcy in 2009, The New York Times reported on Saturday.

 

The Justice Department's investigation of the automaker includes a probe of whether GM committed bankruptcy fraud by not disclosing the ignition problem, a person briefed on the inquiry told the Times on Friday, the paper said.

 

Authorities are also investigating whether GM understated the defect to federal safety regulators, the Times said.

 

...

 

The investigation is being run by FBI agents and federal prosecutors who worked on the fraud case against Toyota that ended in a $1.2 billion settlement last week, the paper said.

 

On Wednesday, GM was hit with a lawsuit demanding that the company be held liable for allegedly concealing ignition problems before its 2009 bankruptcy.

 

GM is a different legal entity than the one that filed the 2009 bankruptcy that shook the U.S. economy. The so-called new GM is not responsible under the terms of its bankruptcy exit for legal claims relating to incidents that took place before July 2009. Those claims must be brought against what remains of the "old" or pre-bankruptcy GM.

 

But the proposed class action, filed in federal court in California, said plaintiffs should be allowed to sue over the pre-bankruptcy actions "because of the active concealment by Old GM and GM."

 

The lawsuit also said GM was responsible for reporting to the federal government any safety-related problems for cars made before its bankruptcy.

How long until we see May Barra plead da fif?