Government Prosecution of Errant VW Execs Is Out Of Control

TDB's picture

Via The Daily Bell


Bloomberg Volkswagen Executives in Germany to Face U.S. Charges in Diesel … Some of Volkswagen AG’s top executives may find it risky to leave Germany as U.S. prosecutors prepare to charge more company officials.  Oliver Schmidt, a VW executive, was arrested in Miami as he was returning to Germany from vacation and faces charges of misleading regulators about the automaker’s diesel-emissions cheating devices. Prosecutors are preparing to charge more high-level German-based executives in the case, a person familiar with the matter said.  Schmidt’s arrest caught many VW executives by surprise, including some attending an auto show in Detroit this week, according to another person.

Were VW officials dishonest and manipulative? Possibly so. Did anyone get badly harmed by their emissions “cheating.” Any hard evidence of that? Probably not.

This is a witch hunt seemingly of greater urgency than catching pedophile priests.  Why? Because VW has money.   White collar crime does pay — for the government, in the fines they manage to extract from the perpetrators.

The way the article reads, this guy’s own lawyer, told the US government he’d be in the USA on holiday. They arrest him as he is about to board the plane home and throw him in a brown jumpsuit and leg irons.


Lawyers for some senior executives in Germany have already warned their clients not to leave the country, according to a third person.  The arrest and the looming charges against senior executives show that the year-long investigation into the emissions cheating is coming to a head in the final days of the Obama administration.


A multibillion-dollar settlement between the carmaker and the Justice Department will probably come this week, people familiar with the matter have said. VW admitted last year that about 11 million diesel cars worldwide were outfitted with so-called defeat devices, embedded algorithms used to game emissions tests.


Schmidt, 48, who was VW’s liaison with U.S. environmental regulators, appeared in federal court in Miami Monday, where a judge ordered him held in custody as a flight risk. His lawyer sought Schmidt’s release, saying his client had alerted the government he was visiting and was willing to speak with investigators and face charges.

That wasn’t enough for the US though. The court filing is a kind of road map of charges aimed at high level German execs.

Other senior levels execs could be arrested this way and the result will be that such execs will stop travelling to the US. The government and VW have been trying to reach a full settlement before Donald Trump is sworn in as president of Jan. 20.

VW has admitted to cheating regarding emission regulations that could be bypassed using algorithms that could lower the amount of pollution generated during testing. Some execs are thus under scrutiny in both Germany and the US.

But really one wonders just how bad the emissions problem really is. In fact from a libertarian standpoint one could make an argument that such standards are not necessary at all.

If it were really a problem, certain manufacturers might make an issue out of the pollution and raise prices on cars that polluted less. Additionally, individuals might put together lists of cars that polluted too much, thus putting pressure on those companies to do less polluting.

If it were a serious issue ultimately as well, insurance companies might get  involved and raise rates on polluters.

What people would not do is make pollution an offense demanding jailing. There probably isn’t even any proof that the kind of pollution generated by VS diesel cars makes one sick … or sicker. Diesel cars are even known for being less polluting than non-Diesel vehicles.

Conclusion: The idea of putting people in jail for minor infractions such as circumventing air pollution requirements is ridiculous. You’re not killing anyone. You’re not even injuring them. It’s just one more way to use government monopoly power to extract money from people who otherwise rightly wouldn’t have to pay.

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CRM114's picture

I'm fed up with corrupt execs in corporations across the Planet. I want the lying, fraudulent barstewards locked up for a very long time. Never mind the fraud perpetrated on the customers - their practices mean they need corrupt subordinates,and thus make it impossible for decent, honest people to get a job or get promoted, especially intelligent ones who they know will be able to work out what the scams are. Beyond anything else, I think it is this which is causing both the worldwide drop in productivity that is killing the global economy, and HR departments to treat workers like sh!t so they can get rid of them fast if they cotton on to a scam.

tarabel's picture



No need to prosecute for 11,000,000 deliberate and wilful violations of the law that were then used to gain an unfair commercial advantage over their competitors.

I would start by confiscating every single one of these cars pronto, and then let every single one of their owners sue the shit out of VW.

After which, I would feed the current and former VW Board of Directors to their shareholders and the factory workers who no longer have jobs.

Aussiekiwi's picture

If only the US would pursue its crooked Bankers with the same level of enthusiasm, if this happened to a US auto firm, nobody would be arrested.

CRM114's picture

Look at GM ignition switch deaths -no execs arrested, or even questioned,except Mary Barra having to come before Congress.


I note CEO Mary Barra blamed "company culture" for the cover up.

I also note not one news source has bothered to find out who was the top HR person at the time, and thus responsible for that "company culture".

I'll give you three guesses, but you'll only need one.

Mary Barra.

Of course, you could also point the finger at the VP of Global Manufacturing Engineering a year earlier, when GM knew for sure the switch was killing people.

Mary Barra.

Handful of Dust's picture

Someone in the Obama administration didn't get their bank deposit or new vacation house from VW.

CRM114's picture

...or they DID get it from a US competitor to VW.

buttmint's picture are the Government Prosecutors toiling over their documents...

francissba's picture

Here's the plan

 German will fly $1,600,000,000 in US dollars on a Falcon 900 to pay the ransom for the jailed German exec.  Loretta Lynch needs to refill the coffers from the Iranian hostage deal for her term is up or she'll have to make up the difference from her pension



jmack's picture

trade war, just like the attacks by obama on toyota


scsherman's picture
scsherman (not verified) Jan 10, 2017 6:55 PM

Was this written by a 12 year old who just discovered libertarianism? I guess in a truly free market he believes that the ability to cheat, lie, and steal is ok and that only market forces should be used to determine the outcome when caught. Even under anarchy an individual is entitled to be made whole when they have been cheated. The burden of proof is not physical harm, but any harm. If I as an individual place a great emphasis on efficiency and emissions of my vehicle when I agree to purchase it, and the person I buy it from has deliberately altered those readings to make the sale, then they have committed an aggressive act. While I certainly don't advocate jail as punishment for such an incident, I am also not content to merely say laissez faire and accept my losses, when the ability to be made whole exists and is relatively straight forward. It is articles like this that are the source of so much justified anger on the left at free market and capitalist ideas. In fact this article perfectly demonstrates the folly of relying on a strictly economic ideology to govern all things.

hxc's picture

Agreed, but the author is right that these GOVERNMENT created auto regulations.

Fedtacular's picture

Should have listened to his mom and bacame a banker.

Grandad Grumps's picture

How about prosecuting Blankfein, Dimon and other serial banking criminals????

walküre's picture

VW execs weren't persecuted when they built Hitler's first People's car with slave labor.

They weren't persecuted when they took millions in downpayments from Germans who wanted the car.

The money went to support Hitler's war instead.

Now this? Unfucking believable is right.

NAV's picture

This man’s arrest has nothing to do with that, except it turns out it’s VW and he’s a German.

When will there be an end to Jewish demands for reparations? When will it be enough? Will it be another 100 years? 200 years? How many?

In 1998, German had already paid out more that $60 Billion to Jewish causes and to Israel since the end of WW II. But that wasn’t enough. In 1998, VW agreed to set up a fund of about $12 million to compensate surviving workers (between 1,000 and 3,000 Jews). Never mind that VW and most other German companies being sued denied any legal responsibility for the Hitler years. No, all German car manufacturers, including BMW and Daimler-Benz: electronic companies, including Siemens; steel companies, including Krupp, and chemical companies, were being sued, with pressure on them increasing, according to the NY Times, “since Switzerland’s three biggest banks reached a $1.25 Billion settlement with Jewish organizations in 1998 over money and gold that belonged to Holocaust victims and was never returned.”

As for Hitler, the idea for the Volkswagen came from Hitler, yes, following a meeting between Hitler and Ferdinand Porsche, but the Volkswagen failed to get into production before the war. And the VW Beetle became the most-produced car in automotive history, with 40 million rolling off production lines between 1945 and 2003.

According to

“In addition to his ambitious campaign to build a network of autobahns and limited access highways across Germany, Hitler’s pet project was the development and mass production of an affordable yet still speedy vehicle that could sell for less than 1,000 Reich marks (about $140 at the time). To provide the design for this ‘people’s car,’ Hitler called in the Austrian automotive engineer Ferdinand Porsche. In 1938, at a Nazi rally, the Fuhrer declared: ‘It is for the broad masses that this car has been built. Its purpose is to answer their transportation needs, and it is intended to give them joy.’ However, soon after the KdF (Kraft-durch-Freude)-Wagen (‘Strength-Through-Joy’ car) was displayed for the first time at the Berlin Motor Show in 1939, World War II began, and Volkswagen halted production. After the war ended, with the factory in ruins, the Allies would make Volkswagen the focus of their attempts to resuscitate the German auto industry.”

VWAndy's picture

 Bankers started and won WW2. WW3 looks to be a bankers deal too.

Quatermain's picture

The FBI needed something high profile to divert attention from their Hillary and Hacking debacles.  I'm actually suprised they didn't take him down with full SWAT regalia. What a bunch of has been losers.  

Dealyer Turdin's picture

Former Bureau of I...

Arrest Thyselves!

NAV's picture

It’s political.

Once more, the Obama Administration turns to politics to make points against a foreign car company. And with an incoming administration we may be in for wall-to-wall political decisions as reflected in cabinet appointments such as Wilbur Ross – who used politics for his advancement.

Ironically, Rush Limbaugh spent half his program today lauding Trump’s oligarch cabinet picks as Horatio Alger heroes, specifically naming Wilbur Ross, among others, as a self-made billionaire to whom we can all look up to as an old school American boy success story. I ask you…

Wikipedia excerpts:

Rothschild Investments

In the late seventies, Ross began twenty-four years at the New York office of Rothschild Inc., where he ran the bankruptcy-restructuring advisory practice. In the eighties, after quickly expanding the reach of Resorts International to Atlantic City, Donald Trump found himself in financial trouble as the real estate market in New York City bottomed-out. His three casinos in Atlantic City were under threat from lenders. It was with the assistance and assurance of Ross, then senior managing director of Rothschild Inc., that Trump was allowed to keep the casinos and rebuild his businesses.[8] In the late nineties, Ross started a $200 million fund at Rothschild to invest in distressed assets. As the U.S. bubble began to burst, he decided he wanted to invest more and advise less. On April Fools’ Day 2000, the 62-year-old banker raised $450 million to plunge into fallen companies.[5]

Political activities

Ross served under U.S. President Bill Clinton on the board of the U.S.-Russia Investment Fund, and later, under New York City Mayor Rudy Giuliani as the Mayor's privatization advisor.[17] In January 1998 he put $2.25 million in seed money into McCaughey Ross's campaign.[citation needed] Although he was an early supporter of Donald J. Trump's presidential campaign, Ross in earlier years was a registered Democrat, served as an officer of the New York State Democratic Party and held fundraisers for Democratic candidates at his apartment in New York City. Since at least 2011, Ross began donating to Republican candidates and organizations, and became a registered Republican in November 2016.[18]

Organizational memberships and directorships

Ross is a member and past director of the Turnaround Management Association and the American Bankruptcy Institute[19] and a member of the Committee on Capital Markets Regulation.[20] As of January 2012, Ross was the leader (or “Grand Swipe”) of the secret Wall Street fraternity, Kappa Beta Phi.[21]

He serves on the board of trustees of the Brookings Institution[22] and the board of advisors of Yale School of Management.

El Cuervo's picture

The EPA doesn't make "law". If we are to accept that the constitution is the law of the land, then the EPA has no business even existing. The notion that unelected bureaucrats can/should be allowed to put forth edicts that carry the power of "law" is silly on the face of it.

Further, as is pointed out in the article, as no person was shown to be in any way harmed by VW's actions and various peoples, including American consumers have actually been financially (and physically in the case of VW execs) harmed by the EPA's actions, it is the EPA that ought to be held to account. It ought to be clear that this unconstitutional bureau ought not exist at all.

not dead yet's picture

Although the EPA has greatly overstepped it's bounds and is in bed with the enviro nazi's one cannot but help notice that the air and water in this country is far cleaner than it has been since the inception of the EPA. Let's not have this crap the auto companies would have made cleaner or safer cars on their own or companies would stop dumping toxic chemicals in the ground and waterways. It costs lots of cash to meet pollution and crash standards and if a single company did it on their own they would have gone out of business as the people took their business to the other guys selling for much much cheaper. Safety and pollution only go so far in selling cars. Cars back in the eighties got better mileage on carbs than we get today with fuel injection and computers. Conspiracy idiots will claim the car companies are in bed with the oil companies but the reality is meeting emissions requirements uses more fuel until new and more expensive technology comes along. Even then the increased mileage will continue to decline as the government requirements get ever tighter. Todays gas cars are almost pollution free but that's not good enough for the enviros. I'd be willing to bet if the government would relax requirements if mileage was to drastically increase we would easily see many cars getting 60 to 70 miles per gallon, like the Honda CRF of the late 80's and overall pollution declining.

panhead20's picture

Cry me a river. No one is harmed by someone smoking pot, but there are thousands in jail for pot possession. Time for corporate execs to do some jail time.

DrData02's picture

Here's a thought: People (persons) who break the law should be held accountable. They should not be able to hide behind a corporation. They are responsible for their actions (probably driven by the hope of personal gain). If their actions are illegal or unethical then they should be punished according to the law.

1980XLS's picture

You mean like the banksters that caused the 2008 Crisis?

Are you saying VW hurt more people?

Paul E. Math's picture

This is what I was thinking.  I'm pretty OK with punishing VW execs for fraudulent corporate practices.  But how about we apply the same standard to those who ran financial institutions?  

How about Steven Mnuchin?  Here we are trying to make him Treasury Secretary when he should be in jail for the predatory lending practices of his OneWest.

And we still think this is a democracy.

Prisoners_dilemna's picture

When I worked at Corning Incs research facility in Corning NY I witnessed CEO Wendell Weeks and Sen. Chuck Schumer shake hands ~2006/2007. SHortly there-after a law was put on the books requiring all new diesels sold in the US to have these diesel filters Corning made.

This was a huge subsidy to Corning. Force every new diesel vehicle sold in the US to have one of these exhaust filters attached, solely to subsidize Corning.

This is sad as

1. corning makes enough money off flat screen glass, gorilla glass, bullet proof glass, lab-ware, and the list goes on and on etc.

2. this was done in the name of climate change, subsidize a US based multinational in the name of global warming, but really they just want the obscene profits by forcing every new diesel vehicle sold in the US to have the exhaust filters attached

3. I had access to the research library where patents are stored. Corning Inc was sitting on a patent from the late 60's which they revived for this travesty. The original purpose of this "filter" was to flow grape juice through it, and because of the huge amount of internal surface area, grape juice became wine in days rather than months. It never sold in fingerlakes wine country, the winemakers didn't want it.To make it into a diesel exhaust filter they added rhodium and other catalytics to the internal space of the filter.

not dead yet's picture

Diesels are filthy and can't meet the pollution requirements that gas powered vehicles do. Rather than shut down a whole industry the government has cut diesels some slack for deades but eventually they will have to meet the same standards. France and other countries in Europe are seriously considering banning diesels and some not all experts say the days of the diesel are numbered. The guy that wrote this screed must have been smoking dope when he claimed diesels are cleaner than gas vehicles. Diesels get better mileage due to the fuel which contains more energy than gasoline. Just because you saw Shumer and a Corning suit shaking hands does not mean the fix was in. Prove that the diesels did not need this filter. Most diesels now are required to have urea injection to meet pollution requirements so prove this is not needed either and some company got a golden contract to supply it. What Volkswagon did by their cheating was to claim their diesels met standards without the urea injection system. If I remember correctly diesels can meet standards without urea but the mileage, which is the main selling point, would greatly suffer and no longer be better than gas cars or trucks which are far cheaper to buy. According to the American car mags a diesel option on an American pickup is between 8 and 10 thousand bucks.

Come up to cold country and follow diesel cars and trucks around. The new ones aren't so bad but you still smell their shit but the older they get the worse you gag. This exhaust hangs low to the ground and lays here for awhile, as you gag on the exhaust from some guys beater pickup 2 miles ahead, which is why big trucks and rigs have stacks. Then you get the pickup guys who buy the diesel performance kits and the gag factor goes way up. Go past a truck stop on a sub 20 degree night and all you see is a blue cloud overhanging a large area as the truckers keep their rigs running all night. The colder it is the worse it gets.

Prisoners_dilemna's picture

To obtain gasoline huge energy inputs are required to refine petroleum. Your comment didn't factor this in. If you had included this in your analysis you would realize diesel (smelly I will concede) is less polluting than gasoline.

Biodiesel does not contain the sulfur and other impurities. Your analysis assumes that petroleum based diesel is our only option.

There is also the arguement that when we consider fuel mileage diesels produce less emissions.


I see Cornings crony capitalism as fruit from a rotten tree. If our government weren't engaging in such rampant cronyism thru the last few decades we might have clean, high-milage, plant based fuels.

Just because diesels smell and produce blue smoke that hangs in the air does not justify cronyism, price fixing, or government picking winners and losers. This is an opportunity for entrepreneurs to create solutions. That option has been foreclosed and now we are arresting car executives because of prior failed cronyism and market intervention. Problem-reaction-solution-problem-reaction-solution. We are paying for these misguided shenanigans.


If you think Corning gives a shit about the environment, take a walk past Sullivan Park (the research facility in Painted Post, NY) any time after 10pm and take a big whiff of the air. It's like burning rubber mixed with dog poo. Most acrid thing i've ever smelt. Or check out some of their other processes. Corning produces obscene amounts of hazrdous waste to produce its "green" solar panel glass etc.


Thank you for your comment.

Handful of Dust's picture

This is a possible result from not contributing to the Klinton "Charitable" Foundation (or Chelsea's wedding).

panhead20's picture

It is about time corporate execs start going to jail. Maybe they will start to obey the laws like the rest of us.
Currently getting caught and the fines are just factored into the cost of doing business.