U.S. indicts two Stellantis managers from Italy on emissions fraud charges

Federal prosecutors unsealed charges against two Italian nationals Tuesday for their alleged role in a conspiracy to defraud U.S. regulators and customers about the fuel efficiency of more than 100,000 diesel vehicles sold in the U.S. by Fiat Chrysler Automobiles.

Sergio Pasini, 43, of Ferrera, Italy, and Gianluca Sabbioni, 55, of Sala Bolognese, Italy — two senior diesel managers at FCA Italy, a subsidiary of Stellantis N.V. — conducted their alleged scheme with Emanuele Palma, 42, of Bloomfield Hills, Mich., who was charged in 2019.

A Justice Department spokeswoman said in an email that the two Italian managers are not in custody. The indictment says they worked for an Italian diesel manufacturing company called VM Motori S.p.A. in Cento, Italy, which was 50 percent owned by Fiat Chrysler in 2010 and became a fully owned FCA subsidiary in 2013.

Palma remains free on bond while awaiting trial.

The indictment says Pasini, Sabbioni and Palma were responsible for developing and calibrating the 3.0-liter diesel engine used in the 2014-16 models of the Ram 1500 and Jeep Grand Cherokee. The filing says their work included calibrating several software features in the vehicles' emissions control systems to meet emissions standards.

But federal prosecutors in Detroit said the three managers and their co-conspirators purposely calibrated the emissions control functions to produce lower nitrogen oxide 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."

Prosecutors allege that the defendants and their co-conspirators referred to the practice as "cycle beating." Doing this led FCA "to achieve best-in-class fuel efficiency and make the subject vehicles more attractive to FCA's potential customers," prosecutors said.

Prosecutors say the three 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."

"We continue to fully cooperate with the Department of Justice, as we have throughout this issue," Stellantis said in an emailed statement.

The company declined to comment further or specify the employment status of the three managers.

When Fiat Chrysler settled civil litigation related to emissions cheating in 2019 for $800 million, it said: "The settlements do not change the company's position that it did not engage in any deliberate scheme to install defeat devices to cheat emissions tests. Further, the consent decree and settlement agreements contain no finding or admission with regard to any alleged violations of vehicle emissions rules."

Pasini and Sabbioni are each charged with one count of conspiracy to defraud the U.S. and to violate the Clean Air Act, one count of conspiracy to commit wire fraud and six counts of violating the Clean Air Act. If convicted, they each face up to five years in prison on the conspiracy count to defraud the U.S. and to violate the Clean Air Act, up to 20 years in prison on the conspiracy count to commit wire fraud and up to two years in prison for each count of violating the Clean Air Act.

Palma is charged with one count of conspiracy to defraud the U.S. and to violate the Clean Air Act, one count of conspiracy to commit wire fraud, six counts of violating the Clean Air Act and two counts of making false statements to representatives of the FBI and the U.S. Environmental Protection Agency's Criminal Investigation Division. In November, U.S. District Judge Nancy Edmunds dismissed four counts and a portion of one count relating to wire fraud against Palma.

Prosecutor Timothy Wyse said during Palma's 2019 arraignment hearing in U.S. District Court in Detroit that Palma "was the lead manager, the lead engineer of producing deceptive software that went into over 100,000 vehicles."

The $800 million settlement in January 2019 included payments of about $2,800 to owners of diesel-powered 2014-16 Ram 1500s and Jeep Grand Cherokees.

The settlement encompassed 104,000 vehicles sold or leased in the U.S.