According to media reports on Tuesday, the Justice Department issued a subpoena under the Financial Institutions Reform, Recovery and Enforcement Act (Firrea) to investigate Volkswagen's emissions cheating scandal.

Firrea is a civil financial fraud law adopted in 1989 and employed, for example, by the Obama administration in the wake of the 2008 financial crisis to extract huge settlements from big banks.

The law would allow the government's civil division to investigate fraud over the last 10 years - twice as long as many fraud statutes allow, the news agency Reuters said, quoting people familiar with the probe.

US business daily Wall Street Journal (WSJ) reported the subpoena on Tuesday, saying the use of the law suggested the German carmaker was facing "another potential source of penalties" after admitting it used illegal software to cheat in US diesel emissions tests.

VW spokeswoman Jeannine Ginivan declined to comment on talks with regulators, but said the automaker "will continue to cooperate with all relevant government agencies," Reuters said.

Watch video 01:26 Share VW say employees could suffer because of emissions scandal Send Facebook google+ Whatsapp Tumblr linkedin stumble Digg reddit Newsvine Permalink https://p.dw.com/p/1I9WH VW workers to suffer amid emissions scandal

Battle for penalties

Using Firrea, US prosecutors are exploring whether lenders were harmed by financing customers' purchases of the cars under inflated values. The resale value of VW diesel cars has dropped since the cheating scandal became public in September.

Moreover, federal prosecutors are also examining whether the company could be charged legally and financially for customers who obtained tax credits when they bought cars they thought emitted fewer pollutants than they actually did, the people familiar with the matter said.

WSJ quoted a law professor at Columbia University, John Coffee, as saying the scandal - known colloquially as 'dieselgate' - had become a "competition among enforcers" in which "everybody would like a little credit for doing something to Volkswagen."

VW faces investigations around the world after it admitted in September to installing cheating software in up to 11 million vehicles. Last month, a US federal judge ruled that Volkswagen has to find an emissions fix for 600,000 US diesel vehicles that is acceptable to US regulators by March 24.

In January, US authorities sued Europe's biggest carmaker for up to $46 billion (41.9 billion euros) for violating environmental laws, and barred VW and its Audi and Porsche brands from selling any new 2016 diesel models. VW also faces more than 500 lawsuits from customers in the US.

uhe/hch (Reuters, dpa, WSJ)