MIAMI—A Volkswagen AG executive indicted in the company’s U.S. emissions scandal who was arrested in Miami while on vacation was denied release on bail Thursday by a judge who found it was too likely he would flee home to Germany.
Federal prosecutors urged the judge to order Oliver Schmidt, 48, held without bail until trial. They said if Schmidt were to return to Germany, there would be no way for the U.S. to extradite him because he is a German citizen.
U.S. Magistrate Judge William Turnoff agreed, noting that Schmidt faces potentially a long prison sentence—the maximum combined penalty for his conspiracy and fraud charges is 169 years—and that the U.S. case against him appears strong.
“I am concerned that he is a citizen of a country that does not have an extradition treaty with the United States,” Turnoff said at a hearing.
Schmidt and five other Volkswagen executives were charged Wednesday in an indictment released in Detroit with playing key roles in VW’s scheme to knowingly sell nearly 600,000 diesel vehicles that did not meet U.S. pollution emissions standards. The scheme involved software that produced acceptable emission levels in U.S. environmental tests but much higher amounts when the vehicles were driven on the roads.
The company itself has agreed to plead guilty and pay a record $4.3 billion criminal penalty. According to a plea agreement, the company first began deceiving the Environmental Protection Agency and California state regulators in 2006.
Schmidt is the only indicted executive in U.S. custody, with the others remaining in Germany. He was general manager of a VW environmental engineering office in Auburn Hills, Michigan, from 2012 to 2015, court papers show.
During that time, the documents say, Schmidt and others actively deceived regulators about the vehicle emissions and he later deleted documents relevant to the subsequent investigation despite company warnings to preserve them.
Justice Department trial attorney Ben Singer also said Schmidt also was deceptive when he voluntarily met with FBI agents in London, England, in November 2016.
“Mr. Schmidt, when he met with us, lied to us,” Singer said.
Schmidt’s attorney, David Massey, said he will again seek Schmidt’s release on bail when he goes to federal court in Detroit, where the case will be set for trial. Massey said Schmidt has no intention of fleeing the U.S., maintains his innocence and is willing to give up his passport and other identification papers if released on bail and house arrest.
Massey noted that before his arrest, Schmidt had flown with his wife from Germany to Miami and the couple then visited Cuba while knowing he was under U.S. investigation. They returned to Miami and spent the December holidays with friends before he was taken into custody on Saturday at Miami International Airport just before he was to fly home.
Schmidt was unaware when he travelled to the U.S. that he faced possible arrest and federal authorities were notified that he was in this country, Massey said.
“He has shown a willingness to submit to the jurisdiction of the United States,” Massey said. “He’s not going to try (to flee). He knows he’d get caught.”