US charges Audi manager with conspiracy to cheat US emissions tests; sacrificing NOx control for a sound system

US charges Audi manager with conspiracy to cheat US emissions tests; sacrificing NOx control for a sound system

10 July 2017

The US has charged a former Audi manager via criminal complaint for his role in a conspiracy to defraud US regulators and customers by implementing defeat device software in thousands of Audi diesel vehicles to cheat US emissions tests.

Giovanni Pamio, 60, an Italian citizen, is charged with conspiracy to defraud the US, wire fraud, and violation of the Clean Air Act. Pamio was formerly head of Thermodynamics within Audi’s Diesel Engine Development Department in Neckarsulm, Germany. According to the complaint, from in or about 2006 until in or about November 2015, Pamio led a team of engineers responsible for designing emissions control systems to meet emissions standards, including for nitrogen oxides (NOx), for diesel vehicles in the US. The complaint cited a cooperating witness (CW1)—an Audi employee who works in
Audi’s Diesel Engine Development Department—as well as contemporaneous documentation in the Statement of Probable Cause.

Beginning in or about 2006, Audi was designing the new 3.0 liter diesel engine that would be the cornerstone for its passenger diesel vehicle sales in the US. The 3.0 liter diesel engine was ultimately placed in certain VW, Audi, and Porsche diesel vehicles sold in the United States for MY 09 through MY 16.

According to CW1 and the documentation, Pamio and his co-conspirators realized they could not calibrate a diesel engine that would meet the stricter NOx emissions standards that would become effective in 2007 while staying within the design constraints imposed by other departments at the company.

According to CW1, and as corroborated by contemporaneous documentation, the proposed Audi 3.0 liter diesel engine employed Selective Catalytic Reduction (“SCR”) technology to reduce NOx emissions. As part of the SCR technology, exhaust stream emissions were dosed with a mist of a urea substance, commonly known as “AdBlue,” which converted NOx into nitrogen, water, and small amounts of carbon dioxide. The initial SCR design required a certain amount of AdBlue be stored onboard the vehicle to reduce NOx emissions
to legal limits and reach a 10,000 mile service interval for refilling. The requisite tank size for onboard storage was believed by certain Audi employees to interfere with features considered to be attractive to customers, such as a high-end sound system.

According to CW1, and as corroborated by contemporaneous documentation, as a result, Audi employees, acting at the direction of Pamio and his co-conspirators, designed and implemented software functions, described below as a “dosing strategy” and a “warm-up function,” to cheat the standard US emissions tests. These functions constituted defeat devices.

—Criminal Complaint, USA v. Zaccheo Giovanni Pamio

  • The dosing strategy varied injection levels of AdBlue into the exhaust system depending on whether the vehicle was being tested. During regular driving, the vehicle used substantially less AdBlue in order to limit consumption, and had correspondingly higher NOx emissions.

  • The warm-up function used the recirculation of exhaust gas during test cycles to warm the SCR catalyst, thereby further optimizing AdBlue use and allowing the vehicle to stay within US NOx emission limits. However, when the defeat device detected that the vehicle was on the road, the engine switched to “customer mode,” reducing the recirculation of exhaust gas, and causing NOx emissions to spike.

Pamio and coconspirators deliberately failed to disclose the software functions, and they knowingly misrepresented that the vehicles complied with US NOx emissions standards, the complaint states.

Audi’s parent company, Volkswagen AG (VW), previously pleaded guilty to three felony counts connected to cheating US emissions standards. The company was ordered to pay a $2.8-billion criminal fine at its sentencing on 21 April 2017.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Deputy Assistant Attorney General Jean E. Williams of the Department of Justice’s Environment and Natural Resources Division, and Acting US Attorney Daniel L. Lemisch of the Eastern District of Michigan made the announcement late last week.

A complaint is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The FBI and EPA-CID investigated the case. This case is being prosecuted by Securities and Financial Fraud Chief Benjamin D. Singer and Trial Attorneys David Fuhr and Christopher Fenton of the Criminal Division’s Fraud Section, Senior Trial Attorney Jennifer Blackwell and Trial Attorney Joel La Bissonniere of the Environment and Natural Resources Division’s Environmental Crime Section, and White Collar Crime Unit Chief John K. Neal and Assistant United States Attorney Timothy J. Wyse of the US Attorney’s Office for the Eastern District of Michigan. The Criminal Division’s Office of International Affairs also assisted in the case.

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