Volkswagen eventually confessed to installing pollution-cheating devices on 11 million vehicles. The software sensed when the 2.0- and 3.0-liter cars were being tested by the EPA and activated pollution systems at the expense of power. It disabled the controls during real-world conditions to give vehicles more performance, however, causing them to emit up to 35 times the legal level of nitrogen oxide. That gas is known to cause respiratory problems and kills up to 30,000 people per year in the UK alone.

The company agreed to settle federal and state lawsuits for $14.7 billion, including $2.7 billion toward an EPA fund to clean up the damaged caused by the polluting cars. Regulators recently agreed to VW's plan to fix 70,000 2015-and-later 2.0-liter models, though buyers also can also sell them back to Volkswagen for the full retail price.

[Audi's] V6 has exactly the same issue [as Volkswagen diesels], but not public yet. They have not been caught.

In a July press conference, NY state Attorney General Eric Schneiderman said the company only admitted the scam "when they knew the regulators had the goods on them." To illustrate the point, he showed an email sent from Oliver Schmidt to a VW spokesperson that read, "[Audi's] V6 has exactly the same issue [as Volkswagen diesels], but not public yet. They have not been caught." That, Schneiderman said, shows that, "these actions highlight how stubborn and unrepentant the culture at Volkswagen is that gave rise to the systematic cheating and deception described in this complaint."

Volkswagen would not confirm the arrest, telling the NYT that while it's cooperating with law enforcement, "it would not be appropriate to comment on any ongoing investigations or to discuss personnel matters." Volkswagen engineer James Liang pleaded guilty to similar charges last September, but if the report is accurate, Schmidt would be the biggest name charged in the scandal so far.