Federal court officials were caught unaware when a key Volkswagen executive who was sentenced in Detroit to seven years in prison for his role in the automaker's diesel emissions scandal was set free early by a court in Germany, just months after he was allowed to return to his native country.
Oliver Schmidt, 52, a former VW engineer who had a central role in widespread violations that have cost the automaker more than $38 billion and counting, was paroled by a court in the city of Lüneburg, Bloomberg reported.
In December 2017, Schmidt was sentenced by U.S. District Judge Sean Cox to 84 months in federal prison and ordered to pay a $400,000 fine after pleading guilty that August to one count of conspiracy and one count of violating the Clean Air Act. The fine has been paid.
David Ashenfelter, a spokesman for the U.S. District Court for the Eastern District of Michigan, said last week that "the court was not aware" that Schmidt had been paroled. He served less than half of his original sentence. Had he remained in the U.S., Schmidt would have been eligible for release on Christmas 2022, according to the Federal Bureau of Prisons.
In Germany, inmates can be released after serving two-thirds of their term. Parole after only half of the time is rare but can be granted to first-time offenders who demonstrated good behavior and are deemed unlikely to commit crimes in the future, Bloomberg reported.
"Once the USA agrees to a sentence being carried out in Germany, that means domestic law is solely and exclusively applied as soon as a criminal sets foot on German soil," said a spokeswoman for the German authorities.
A representative of the U.S. Department of Justice told Automotive News that "once transferred under the international prisoner transfer program, individuals are resentenced in accordance with the law of their home country and are subject to that country's incarceration and release rules. The transfer process does not contemplate a role for the surrendering jurisdiction in the resentencing, nor in the parole process in the foreign country."
In July, a U.S. District Court magistrate granted Schmidt's then 2-year-old request to finish his sentence in his native land. He had been incarcerated in a federal penitentiary in Milan, Mich., about 45 minutes southwest of Detroit. The Bureau of Prisons website indicates that Schmidt left custody Sept. 24.
Schmidt had headed up the automaker's compliance office in suburban Detroit. He admitted to plotting with other executives to cover up the company's cheating on diesel emissions and had been in prison since his arrest in Miami in January 2017 while returning from a Christmas holiday in Florida. VW fired Schmidt that year.
The circumstances of Schmidt's early release are similar to what occurred with another former VW engineer convicted of a felony for his role in the diesel scandal, James Liang.
Liang, a German national who had cooperated with investigators, pleaded guilty to his role and was sentenced in August 2017 to 40 months in prison. He was released in December 2019 one month after being transferred to German custody.
While the Department of Justice indicted several VW executives and maintains warrants for their arrest, including former CEO Martin Winterkorn, those executives are shielded from extradition to the U.S. under German law. German authorities continue to prosecute former VW executives, including Winterkorn and former Audi boss Rupert Stadler. The violations, discovered by U.S. regulators in September 2015, continue to cost VW.
The automaker's use of "defeat device" software to cheat on emissions tests was discovered in 2014 by researchers at West Virginia University.
The rigging of engines to make it appear that they could pass U.S. tests has cost the world's largest automaker billions in fines and settlements. Lawsuits from disgruntled investors and customers are set to drag on for years, Bloomberg reported.