U.S. Probes Possible GM Bankruptcy Fraud

The U.S. Dept. of Justice intends to determine if General Motors Co. committed bankruptcy fraud by failing to disclose an ignition switch defect when it filed for bankruptcy five years ago, The New York Times reports.

The newspaper, which cites an unnamed source, says the probe is being handled by the FBI and federal prosecutors. The team previously conducted the investigation that led to last week's $1.2 billion fraud settlement case involving unintended acceleration recalls by Toyota Motor Corp.

The Times says the group also aims to determine whether GM deliberately understated the switch defect to federal safety agencies.

The flawed switches, which GM first learned of 13 years ago, have been linked to 12 fatalities. The company is recalling 1.6 million affected vehicles that were equipped with the devices. The switches can be jostled out of the "on" position, thus turning off the power steering, power brakes and airbags while the vehicle is moving.