Justice Department plans to unveil criminal charges against GM

Justice Department plans to unveil criminal charges against GM

Last year, Toyota’s record breaking $1.2 billion settlement for the unintentional acceleration recall shocked the automotive industry. The unprecedented fine and recall drew comparisons to GM’s developing issues for the faulty ignition switch. Analysts believed the punishment would set the standard for the GM investigation.

For more than a year, the FBI and federal prosecutors from Manhattan have been investigating whether or not the automaker intentionally disclosed the defect and misled regulators about the full extent of the issues. Additionally, the team looked into GM’s 2009 bankruptcy to determine if the company was fraudulent during the proceedings by not discussing the known problem with the detent plunger.

While the specific results of the investigation haven’t been released, the investigators for the Justice Department identified criminal wrongdoing and plan to pursue charges and fines against GM, and possibly charges against former employees, some of whom were fired after Anton Valukas completed his internal investigation of GM.

Potentially reaching a settlement by summer, the fine is expected to be greater than Toyota’s last year. Because GM is determined to finish the investigation as soon as possible, a stark contrast to Toyota’s four-year fight against prosecutors, the company will most likely receive a cooperation credit against the total amount.

After fining Toyota, the Justice Department agreed to deferred prosecution, potentially dismissing the fee if it complied with regulators and continued to review all safety procedures. It’s possible GM could receive a similar deal, or the prosecutors will force the automaker into pleading guilty, making the company a felon.

This won’t be the final step for GM. Despite the agreement, state attorney generals are conducting consumer fraud investigations as well as many personal injury and wrongful death lawsuits being filed by attorneys for victims.

The U.S. attorney’s office in New York believes GM deceived regulators and legal entities alike with misstatements for more than a decade, thus validating the criminal charge. So far more than 100 people lost their lives due to failure to disclose with hundreds more suffering severe and debilitating injuries.

Sources
  • Stephen Gandel, “GM: Criminal charges likely in ignition case,” Fortune (May 24, 2015). [Link]
  • Danielle Ivory, Ben Protess & Bill Vlasic, “GM inquiry said to find criminal wrongdoing,” The New York Times (May 22, 2015). [Link]
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