DETROIT — The U.S. division of Stellantis NV on Friday pleaded guilty for cheating on government emissions testing on Jeep and Ram vehicles and will pay a total of nearly $300 million in penalties and forfeitures.
It's the second guilty plea for criminal conduct for FCA US LLC in as many years for actions taken prior to parent Fiat Chrysler Automobiles NV's merger with French automaker Groupe PSA that created Stellantis last year.
The settlement includes a nearly $204 million forfeiture from the models sold on which it had cheated on the tests and an additional penalty of more than $96 million. The company also is subject to three years of probation and is required to cooperate in the government's further investigation into the matter.
Stellantis previously accrued approximately $301 million to cover the settlement, the company said in a statement.
FCA on Thursday was charged with one count of conspiracy to defraud the United States in violation of the Clean Air Act and to commit wire fraud. The statute maximum penalty is $500,000 or two times the gross gain or loss from the offense, Assistant U.S. Attorney John Neal said during a plea hearing.
The accusations stemmed from a pending 2019 case against diesel senior manager Emanuele Palma and two Italian nationals who work for FCA Italy SpA, the Italian subsidiary of Stellantis. Prosecutors accused the officials of conspiring to cheat federal emissions tests and deceiving consumers about the fuel efficiency of more than 100,000 diesel Jeep Grand Cherokee SUVs and Ram 1500 pickup trucks spanning model years 2014 to 2016.
Christopher Pardi, general counsel and corporate secretary for FCA in North America, in a statement he read in court on behalf of the company, alleged Palma, Sergio Pasini and Gianluca Sabbioni cheated to achieve the automaker's commercial objectives of 30 miles per gallon fuel economy and 10,000 diesel exhaust fluid refill miles. The actions, Pardi said, resulted in the "misleading and false representations" by FCA provided to government agencies in the vehicles' certification for sale and to customers.
FCA wasn't alone in emissions testing cheating. Its settlement comes five years after Volkswagen AG pleaded guilty to criminal charges to resolve emissions cheating allegations affecting nearly 600,000 vehicles. The scandal known as "Dieselgate" resulted in VW paying a $2.8 billion criminal fine, though total penalties, civil damages and restitution have neared $35 billion, the automaker said in 2020.
Like in VW's case, FCA's settlement doesn't include restitution. The automaker has paid $183 million to 63,000 customers through civil litigation, Neal said. Other civil allegations FCA has settled on the matter didn't require the company to admit guilt.
"Consumer claims related to the subject vehicles have already been resolved, and no additional recalls are required," Stellantis said in a statement.
The automaker, federal regulators have said, didn't disclose at least eight auxiliary emission control devices on its Jeeps and pickups. Automakers can legally deactivate a vehicle's emission control system under certain conditions, but regulators require they disclose them when applying for certificates that are needed to sell cars in the U.S.
Because of the use of the defeat devices, the Jeeps and trucks released more nitrogen oxides during customer use than during government testing. In the outdoor air, they can create ozone, and elevated levels of nitrogen dioxide can damage the human respiratory tract, according to the Centers for Disease Control and Prevention.
"We expect all corporations to deal with regulators and the public openly and honestly," said Dawn Ison, U.S. Attorney for the Eastern District of Michigan, in a statement. "Unfortunately, one of our district's biggest corporations fell far short of that standard, resulting in today's guilty plea."
The automaker previously settled in January 2021 a criminal investigation into auto executives breaking federal labor laws by agreeing to pay $30 million.
FCA pleaded guilty to one count of conspiracy to violate the Labor Management Relations Act. It ended prolonged negotiations stemming from a years-long corruption scandal involving the United Auto Workers. The investigation led to more than a dozen convictions, including three FCA employees, and revealed union leaders and auto executives broke federal labor laws, stole union funds and received bribes and illegal benefits from union contractors and FCA executives.
"Clean diesel" technology was meant to meet increasingly stringent environment rules, but the vehicles were polluting more than they did during tests certifying them for sale. Dieselgate resulted in regulators cracking down on automakers accused of using illegal software, called defeat devices, to pass government testing.
The industry today is shifting to electrified vehicles to cut emissions. Stellantis is investing $35.5 billion into electrification and software by 2025 and says more than half of U.S. sales will be all-electric by the end of the decade.
FCA's sentencing hearing has been scheduled for 1:30 p.m. on July 18.
