Audi Managers Charged in Conspiracy to Cheat U.S. Emissions Tests

Four Audi managers, including a former member of Audi AG’s management board, were charged in an indictment filed on Jan. 17 for their roles in the nearly decade-long conspiracy to defraud U.S. regulators and U.S. customers by implementing software specifically designed to cheat U.S. emissions tests in tens of thousands of Audi “clean diesel” vehicles, the Justice Department announced today.

Principal Deputy Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, Deputy Assistant Attorney General Jean Williams of the Justice Department’s Environment and Natural Resources Division, U.S. Attorney Matthew Schneider of the Eastern District of Michigan, Assistant Administrator of the Environmental Protection Agency (EPA) Office of Enforcement and Compliance Assurance Susan Bodine, and Special Agent in Charge Timothy R. Slater of the FBI Detroit Field Office made the announcement.

Richard Bauder, 69, former head of Audi’s Diesel Engine Development Department; Axel Eiser, 57, former head of Audi’s Engine Development Division; Stefan Knirsch, 52, former head of Audi’s Engine Development Division and a former member of Audi’s Management Board, and Carsten Nagel, 50, former head of Diesel Certification, were charged in the Eastern District of Michigan with one count of conspiracy to defraud the United States, to commit wire fraud and to violate the Clean Air Act, along with multiple counts of wire fraud and multiple counts of making false statements under the Clean Air Act.  All four are believed to be citizens of Germany.  These individuals join Giovanni Pamio, 61, an Italian citizen, who was charged via criminal complaint in July 2017 and whose extradition from Germany is being sought by U.S. authorities.  Pamio was formerly head of Thermodynamics within Audi’s Diesel Engine Development Department in Neckarsulm, Germany.

According to the indictment, from in or about 2006 until in or about November 2015, Pamio led a team of engineers responsible for designing emissions control systems to meet emissions standards, including for nitrogen oxides (NOx), for Audi 3.0 liter diesel vehicles in the United States.

The indictment further alleges, when Bauder, Eiser, Knirsch, Nagel and Pamio realized that it was impossible to calibrate a diesel engine that would meet NOx emissions standards within the design constraints imposed by other departments at the company, they directed Audi employees to design and implement a software function to cheat the standard U.S. emissions tests.  The co-conspirators deliberately failed to disclose the software function, and knowingly misrepresented to U.S. regulators and U.S. customers that the vehicles complied with U.S. NOx emissions standards, the indictment alleges. Bauder, Eiser, Knirsch, Nagel, and Pamio also are alleged to have marketed the Audi 3.0 liter vehicles to the U.S. public as “clean diesel,” when they knew that these representations were false.

Audi’s parent company, Volkswagen AG (VW), previously pleaded guilty to three felony counts connected to cheating U.S. emissions standards.  VW was sentenced in April 2017, and the company paid a $2.8 billion criminal penalty.

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The FBI and EPA-CID investigated the case. This case is being prosecuted by Trial Attorneys Christopher Fenton and David Fuhr of the Criminal Division’s Fraud Section, Senior Trial Attorney Jennifer Blackwell and Trial Attorney Joel La Bissonniere of the Environment and Natural Resources Division’s Environmental Crime Section, and White Collar Crime Unit Chief John K. Neal and Assistant U.S. Attorney Timothy J. Wyse of the Eastern District of Michigan.  The Criminal Division’s Office of International Affairs also assisted in the case. The Department of Justice also extends its thanks to the Munich II Prosecutor’s Office in Munich, Germany, for its assistance.