1. Business

VW engineer pleads guilty in emissions case, will cooperate

DETROIT — A Volkswagen engineer has pleaded guilty to one count of conspiracy in the company's emissions cheating scandal, advancing a criminal investigation by agreeing to testify against others.

James Robert Liang, 62, of Newbury Park, Calif., entered the plea Friday in U.S. District Court in Detroit to one count of conspiracy to defraud the government through wire fraud.

Liang is the first person to enter a plea in the case, and his cooperation is a major breakthrough in the Justice Department's probe into the scandal. Government documents say others were involved and point to multiple emails in German that likely came from VW employees in Wolfsburg, Germany.

Volkswagen has admitted to installing software on about 500,000 2-liter diesel engines in VW and Audi models in the United States that turned pollution controls on during government tests and turned them off while on the road. The Environmental Protection Agency found that the cars emitted up to 40 times the legal limit for nitrogen oxide, which can cause human respiratory problems.

Liang, who started working for VW in 1983 in Germany and also worked in the United States, was indicted in June on one count of conspiracy to commit wire fraud and another count of violating the Clean Air Act. According to a plea agreement unsealed Friday, Liang admitted that he and others planned software known as a defeat device that could cheat U.S. emissions tests after recognizing that a diesel engine they were designing could not meet customer expectations and stricter emissions standards. Using the defeat device enabled VW to obtain a certificate from the Environmental Protection Agency needed to sell the cars in the states.

Liang pleaded guilty to the conspiracy charge. He will be sentenced Jan. 11. The judge said that guidelines call for Liang to serve five years in prison. He also could be fined up to $250,000.

Volkswagen wouldn't comment on the plea, but said Friday that it continues to cooperate in the investigation.

Assistant U.S. Attorney Mark Chutkow told the judge that two or more of Liang's colleagues also had knowledge of the conspiracy.

According to the indictment, Liang and his co-conspirators were tasked with designing new diesel engines for the U.S. market that complied with stricter emissions standards for nitrogen oxide emissions that went into effect in 2007.

Prosecutors say Liang and other engineers realized they could not design a diesel vehicle that met the stricter U.S. emission standards and performed well enough to satisfy customers. So they began work on defeat device software that would cheat on the tests, the indictment says.

Within VW, the cheating software was referred to as "cycle beating," or "emissions tight" mode, among other terms, according to the indictment.

The scheme began to unravel in 2014 when a nonprofit group discovered that the cars polluted too much in real-world driving conditions. But prosecutors say that Liang and his VW colleagues still conspired to hide the existence of the defeat devices.