Manhattan U.S. Attorney Preet Bharara is no stranger to prosecuting major automotive corporations – he led the criminal probe on Toyota’s unintended acceleration troubles. That case ultimately ended with the Japanese automaker choosing to dish out $1.2 billion to settle allegations of fraud. Now Bharara is leading a criminal probe against General Motors related to the ignition switch defect that took at least 13 lives.
Sources tell Reuters that “federal criminal prosecutors are working on a set of mail and wire fraud charges [against GM], similar to the criminal case Toyota Motor Corp settled earlier this year over misleading statements it made to American consumers and regulators about two different problems that caused cars to accelerate even as drivers tried to slow down.”
According to Reuters, the charges will only pertain to General Motors and not Delphi since the parts manufacturer “did not make substantial public statements about the safety of the vehicles or the part.” The goal of the prosecution is to show that those inside of General Motors were aware of the ignition switch defect while they were telling regulators that the problem was in check.
In the case of Toyota, Bharara’s team found that the company had internally acknowledged an issue that may lead to a vehicle’s gas pedal getting stuck under floor mats but went on to play down the issue to the National Highway Traffic Safety Administration.
In General Motors’ case, findings “like a 2005 notice to dealers, directing them to tell customers to remove unessential items from their key chains” (discovered by lawyer Anton Valukas) may serve as the push the prosecution needs to win its case. Valukas’ report states that internal discussions led GM to “[eliminate] the word ‘stall’ from the notice because of concerns that the word could worry customers about vehicle safety.”
Though General Motors went through bankruptcy in 2009, legal experts have told Reuters that “bankruptcy does not release GM from criminal liability in a fraud case.” GM spokesman Greg Martin declined to comment on the pending criminal case against the company, but did tell Reuters that GM is continuing to work with investigators.