Eric D. Lawrence

Detroit Free Press

An engineer who helped develop the engines at the center of the Volkswagen diesel emissions cheating scandal was sentenced today in federal court in Detroit to 40 months in prison, becoming the first person in the scandal facing a prison term.

While the engineer, James Liang, was not the "mastermind" behind VW's Dieselgate scheme, authorities said he was a key player who was involved throughout the years-long effort to cheat U.S. emissions tests and the subsequent coverup.

Liang's sentence was more than the three years prosecutors had recommended and less than a possible five-year sentence, but U. S. District Judge Sean Cox appeared intent on sending a message to others in the auto industry.

Calling Liang an important member of a "massive and stunning fraud," Cox cited the potential impact on America's economy.

"This crime is a very serious and troubling crime against our economic system," Cox said, noting that what Liang and Volkswagen had done was to undermine the trust between buyers and sellers.

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Cox admitted that he found it difficult to impose the prison sentence in part because Liang appeared to be a good father who had worked hard to build a life. He said Liang was "arguably a brilliant engineer" but one who had been "arguably too loyal to Volkswagen."

Federal prosecutors had cited Liang's "substantial assistance" in recommending a term less than the maximum because Liang, 63, had been prepared to testify against co-defendant Oliver Schmidt, a former VW manager who faces a possible seven-year term when he is sentenced in December on similar charges. Schmidt is currently being held in federal prison in Milan, Mich.

The case stems from the German automaker's use of so-called defeat devices that sought to cheat U.S. emissions tests. Those devices allowed the vehicles to pollute less when they were being tested. The scheme began to unravel in 2014 and later led 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 admitted using its defeat devices on about 11 million vehicles globally. Last month, regulators OK’d a fix for most of the problem vehicles in the U.S., including the Jetta, Jetta Sportswagen, Golf, Beetle, Beetle Convertible and Audi 3 from model years 2009 through 2014 with Volkswagen’s 2-liter diesel engines. Owners who opt for the fix also get a cash payout.

Liang, a German national, pleaded guilty in September in U.S. District Court in Detroit to conspiracy. In addition to his prison sentence, Liang was ordered to serve two years of supervised release and pay a $200,000 fine. He is to be deported after his sentence.

Liang will be allowed to surrender to authorities to begin his sentence at a later, unannounced date.

In rejecting a request from Liang's attorney that his client be assessed a "nominal" fine, Cox noted that Liang lived in a five-bedroom, 3,600-square-foot house with a swimming pool in an exclusive part of Southern California and "of course VW pays the rent."

Liang wore a gray suit and hugged several family members after he was sentenced. He had chosen not to address the court during the sentencing, but his attorney, Daniel Nixon of Los Angeles, told Cox that his client has accepted responsibility repeatedly for his involvement, but Nixon painted Liang as less of a central figure in the scandal than one of many people involved and someone who had made a terrible mistake.

"This is a day (Liang) has been waiting for for two years and probably much longer than that ... There are no excuses," Nixon said, while noting that Liang was an engineer rather than a manager, supervisor or executive.

"Mr. Liang was among a wide-ranging group of people who made this wheel turn," Nixon said, claiming that his client committed a crime but is not a criminal.

The government had described Liang in its sentencing recommendation as a "a mild-mannered, soft-spoken man who worked his entire 34-year career at VW," but as prosecutors had noted earlier, Assistant U.S. Attorney Mark Chutkow again cited Liang's connection to the diesel engines that landed the automaker in so much trouble. The government said Liang was "one of VW’s most valuable diesel engine experts and the 'Leader of Diesel Competence' in the United States."

Chutkow acknowledged that Liang was not the mastermind of the scheme and that there are "other, high level officials" in Germany whom American authorities have not been able so far to bring to justice.

However, he discounted a comparison of Liang as a small fish in a criminal conspiracy like a drug cartel.

"Mr. Liang was not a lowly drug courier in this case," Chutkow said, noting that he was an esteemed engineer who was the one person who really knew the intricacies of the defeat device and who had been involved in the conspiracy since the beginning in 2006.

