VW in Talks to Settle U.S. Justice Dept. Probe into Diesel Cheating

Volkswagen AG and the U.S. Dept. of Justice are in preliminary talks that could settle a criminal investigation into the carmaker’s diesel emission test cheating by year-end, according to media reports.

Federal prosecutors have turned up evidence of criminal misconduct by VW but have not mentioned specific charges, sources tell The Wall Street Journal, which first reported on the talks. Earlier reports indicated the department was looking into banking, tax and/or wire fraud.

Prosecutors are considering whether to pursue a guilty plea from VW. A second option would be a “deferred prosecution” agreement that would dismiss charges if the company met the terms of the settlement. In either case, VW would face a fine as great as $1.2 billion for its civil and criminal wrongdoing, according to the Journal.

Under the latter scenario, VW would agree to a consent decree, pay a large fine and perhaps submit to several years of outside monitoring of its emission test procedures.

It isn’t clear if the Justice Dept. probe also plans to charge individuals for criminal wrongdoing. At least some of those facing prosecution presumably would be located in Germany and thus would need to be extradited, the Journal’s sources point out.