Brent Snavely

Detroit Free Press



DETROIT -- Oliver Schmidt, a key figure in the government's investigation into Volkswagen's diesel emissions scandal, pleaded not guilty in federal court here.

Schmidt, 48, is accused of working with a group of Volkswagen executives over a period of years to develop, deploy and conceal devices that enabled the German automaker to cheat on laboratory emissions tests.

The devices helped one of the world's largest automakers pass laboratory tests while, at times, spewing 35 times the legal limit of nitrogen oxides during real-world driving.

Schmidt worked for Volkswagen from about 2012 to February 2015 in Auburn Hills as general manager responsible for communicating with U.S. regulatory agencies until he returned to Germany. He continued working for the company until about September 2015.

Schmidt, wearing a red cotton shirt and red sweatpants worn by Wayne County, Mich., Jail inmates, is suffering from shingles and wants to be transferred to federal prison in Milan, Mich., his lawyer said.

David DuMouchel, an attorney with Butzel Long, asked U.S. Magistrate Steven Whalen for the transfer and also asked for a recommendation that Schmidt be allowed to receive medication for shingles from his wife. The magistrate agreed and said he would also ask for Schmidt to receive medical attention.

DuMouchel also asked that Schmidt be permitted access to a computer while in custody so he can properly prepare for the trial.

"This is a very paper-intensive matter," DuMouchel told the magistrate.

After the hearing, DuMouchel said he would be seeking bond for Schmidt.

Schmidt, who was arrested in Florida last month, has been indicted on 10 counts that include violations of the Clean Air Act and wire fraud. Collectively, those charges add up to a possible sentence of 149 years in prison, but judges rarely stack charges consecutively.

He is one of six Volkswagen executives indicted in January. An engineer, James Robert Liang, pleaded guilty to one count of conspiracy to defraud the U.S. last fall.

The government says the executives spent more than a decade developing software that was designed to defeat the government's laboratory testing and lied on a federal certification process.

The conspiracy, along with its cover-up, has forced Volkswagen to agree to civil settlements worth about $17 billion for U.S. consumers and dealers who own the automaker's diesel vehicles and an additional $4.3 billion to settle criminal charges. Volkswagen is scheduled to appear in court to formally plead guilty, as a company, on March 10.

Volkswagen's troubles began in 2014 when the California Air Resources Board (CARB) received a study published by the International Council on Clean Transportation that showed nitrogen values for Volkswagen diesel vehicles were far higher when the vehicles were tested on the road than in labs.

After an investigation by both CARB and the U.S. Environmental Protection Agency, the government issued a notice in September 2015 alleging that model year 2009-15 Volkswagen and Audi diesel cars with 2.0-liter engines included the devices designed to hide the true amount of pollution emitted by diesel engines. Eventually, Volkswagen admitted that 11 million vehicles worldwide were outfitted with the devices.

"On or about May 9, 2014, Schmidt sent an e-mail to a VW employee stating 'Are you crazy? Recall the e-mail,'" the government said in its indictment.

Schmidt was responding to an e-mail that said, "As mentioned orally, VW currently has the problem of high off cycle emissions, that the EPA has now found out about and we must respond."