Report: Prosecutors, GM Reach $900M Agreement To Settle Criminal Charges Over Ignition Defect

(Louis Abate)

Federal prosecutors are poised to settle a criminal investigation into General Motor’s mishandling of the ignition switch defect linked to more than 120 deaths and hundreds of injuries.

Citing people briefed on the matter, the Wall Street Journal reports that today the Justice Department will likely unveil a $900 million fine as part of a deferred-prosecution settlement with GM, putting an end to an investigation that the automaker deliberately misled consumers about the safety of millions of vehicles.

Prosecutors are also expected to charge GM with criminal wire fraud for allegedly making misleading statements and concealing information about the faulty switch.

As a deferred-prosecution agreement, the Justice Department will eventually dismiss the case if GM abides by its terms, the WSJ reports.

While sources briefed on the matter tell the WSJ that prosecutors are still investigating individual employees for their part in concealing the deadly defect, the current agreement likely won’t include charges against individuals.

The defective ignition switches in Chevy Cobalts and other GM vehicles could be inadvertently turned off while the car was in operation, thus disabling power steering, braking, and airbags. While top GM executives claim to have been unaware of the problem, engineers at the car maker knew about the issue and quietly changed the switch without alerting consumers or regulators.

It wasn’t until 2014, more than a decade after the first defective vehicles hit the road, that GM issued a recall. At the time, the company acknowledged only 13 deaths tied to the problem. However, an independent compensation fund set up to review death and injury claims related to the recall now admits to more than 100 fatalities.

Sources tell the WSJ that the prosecutors ran into roadblock when it came to charging individuals with wrongdoing in the defect debacle because of limitations in federal law that requires investigators prove that someone intended to defraud, not just that the conduct was deceptive.

The proposed $900 million fine against GM pales in comparison to the Justice Department’s last criminal probe into an automaker.

Last year, the Dept. reached a $1.2 billion agreement with Toyota to defer prosecution over that car company’s sudden unintended acceleration issues.

GM, Justice Department Near Criminal Settlement Over Defective Ignition Switch [The Wall Street Journal]

by Ashlee Kieler via Consumerist