German Automotive Manufacturer Fined for Role in Volkswagen Emissions Fraud

The U.S. Department of Justice building in Washington, D.C.
The U.S. Department of Justice building in Washington, D.C.

A federal court in Detroit sentenced a German company to pay a $35 million criminal penalty for its role in the Volkswagen diesel emissions scandal.

The penalty levied on Wednesday against IAV GmbH (IAV) is due to the company’s guilty plea for its role in a long-running scheme of VW selling 335,000 diesel vehicles in the U.S.

Department of Justice officials said IAV used a defeat device to cheat on U.S. emissions tests that are required by the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB). The scandal resulted in the $3 billion VW Environmental Mitigation Trust fund that allows states to purchase alternative fuel and new diesel school buses as well as other commercial vehicles.

During the sentencing hearing, U.S. District Judge Sean F. Cox of the Eastern District of Michigan accepted plea agreement. That deal includes appointing an independent corporate compliance monitor for two years.



IAV pleaded guilty in December 2018 to participating in a conspiracy to defraud the United States and VW’s U.S. customers.

The company also pleaded guilty to violating the Clean Air Act, by misleading the EPA and U.S. customers about whether certain VW- and Audi-branded diesel vehicles complied with U.S. emissions standards.

Department of Justice officials said IAV admitted that it and its co-conspirators knew the vehicles did not meet U.S. emissions standards. Those companies also worked collaboratively to design, test and implement cheating software to cheat the U.S. testing process.

The DOJ added that IAV further admitted it was aware that VW concealed material facts about its cheating from federal and state regulators, plus U.S. customers. Based on the U.S. Sentencing Guidelines, IAV’s $35 million fine was set according to the company’s inability to pay a higher fine amount without jeopardizing its continued viability.