Federal prosecutors Tuesday unsealed new criminal charges that named several Stellantis (formerly Fiat Chrysler Automobiles) officials accused of conspiring to cheat U.S. emissions tests and defraud customers buying their diesel-powered products. The indictment was opened in the Eastern District of Michigan, identifying FCA diesel senior manager Emanuele Palma (42) and two Italian nationals employed by FCA Italy SpA — Sergio Pasini (43) of Ferrera and Gianluca Sabbioni (55) of Sala Bolognese.
Palma had been charged previously and becomes a co-conspirator in the alleged plot to develop a 3.0-liter diesel engine used in FCA vehicles that could flummox emissions tests allowing the automaker to sell vehicles that did not adhere to government regulations. The motor started appearing inside engine bays in 2014, including popular models like the Ram 1500 and Jeep Grand Cherokee.
The indictment comes 18 months after Palma was first charged with federal crimes that overlapped with the federal crackdown on collusion between the automotive industry and the United Auto Workers. That investigation led to 15 convictions, including former FCA VP Alphons Iacobelli and numerous high-ranking members of the UAW.
While the manufacturer agreed with the Securities & Exchange Commission to issue a $9.5-million settlement to help dissolve allegations that it intentionally misled investors in 2016 over the same vehicles, and spent almost a billion dollars in related civil penalties, some employees have remained in Dutch. Last year, Palma was looking at 13 counts against him with the judge dismissing a handful of wire fraud charges and was being painted as a liar by prosecutors. According to the Department of Justice, he will be confronting one count of conspiracy to defraud the U.S. and to violate the Clean Air Act, one count of wire fraud conspiracy, six counts of violating the Clean Air Act and two counts of making false statements to federal investigators as per the new documents.
Pasini and Sabbioni are looking at one count of conspiracy to defraud the U.S. and to violate the Clean Air Act, six counts of violating the Clean Air Act, and one count of conspiracy to commit wire fraud.
From the DOJ:
The superseding indictment alleges that Palma, Pasini, Sabbioni, and their co-conspirators, purposely calibrated the emissions control functions to produce lower NOx emissions under conditions when the subject vehicles would be undergoing testing on the federal test procedures or driving “cycles,” and higher NOx emissions under conditions when the subject vehicles would be driven in the real world. Palma, Pasini, Sabbioni, and their co-conspirators allegedly referred to the manner in which they manipulated one method of emissions control as “cycle beating.” As alleged, by calibrating the emissions control functions on the subject vehicles to produce lower NOx emissions while the vehicles were on the driving “cycle,” and higher NOx emissions when the vehicles were off the driving “cycle,” or “off cycle,” the three defendants purposely misled FCA’s regulators by making it appear that the subject vehicles were producing less NOx emissions than they were, i.e., in real world driving conditions. Palma, Pasini, and Sabbioni also allegedly made and caused others to make false and misleading representations to FCA’s regulators about the emissions control functions of the subject vehicles in order to ensure that FCA obtained regulatory approval to sell the subject vehicles in the United States.
The indictment also alleges that the three men used the above strategy to achieve best-in-class fuel efficiency as a way to make the vehicles more attractive to potential customers similar to how Volkswagen ran the Dieselgate scandal. This also opens up the door for the feds to nab other people that might have been involved by establishing the premise that co-conspirators would have understood “cycle beating” for the act to have been accomplished in the first place.