Detroit, Michigan - A senior manager of diesel drivability and emissions at Fiat Chrysler Automobiles (FCA) was charged in an indictment unsealed Tuesday for his alleged role in a conspiracy to mislead U.S. regulators, customers and the public by making false and misleading statements about the emissions control software used in more than 100,000 FCA diesel vehicles in order to increase the vehicles’ emissions when they were not running on federal emissions test cycles.
Emanuele Palma, 40, an Italian citizen and resident of Bloomfield Hills, Michigan, is charged with one count of conspiracy to defraud the United States, to violate the Clean Air Act and to commit wire fraud. Palma is also charged with six counts of violating the Clean Air Act, four counts of wire fraud and two counts of making false statements to representatives of the FBI and the U.S. Environmental Protection Agency’s Criminal Investigation Division (EPA-CID).
“Cheating government regulators, customers, and the public for increased sales and compensation will be prosecuted by the Department of Justice to the fullest extent of the law,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “The indictment unsealed today demonstrates that the Criminal Division is committed to investigating and prosecuting sophisticated criminal schemes and corporate crimes that violate the Clean Air Act and other federal laws.”
“Emanuele Palma is alleged to have lied to the EPA, impeding its mission,” said U.S. Attorney Matthew Schneider of the Eastern District of Michigan. “The charges announced today are serious ones, and reflect my office’s commitment to preserving the integrity of the American regulatory system.”
“The defendant is alleged to have knowingly misled EPA regulators to cover up illegal emissions control software installed in certain Fiat Chrysler diesel vehicles,” said Susan Bodine, EPA Assistant Administrator for Enforcement and Compliance Assurance. “We are prepared to use our criminal authorities when faced with allegations of lying and cheating to evade U.S. emissions standards.”
“The indictment in this case should signal to corporations and individuals working for them that there are significant consequences for attempting to bypass US emissions tests and defraud the American people,” said Special Agent in Charge Steven M. D'Antuono of the FBI’s Detroit Field Office. “The FBI is committed to working alongside our US and international partners to investigate these corporate crimes and to hold those who are alleged to violate environmental regulations accountable for their actions.”
As alleged in the indictment, Palma led a team of engineers in the United States responsible for developing and calibrating the 3.0-liter diesel engine used in certain FCA diesel vehicles. Palma supervised the calibration of several software features in the vehicles’ emissions control systems to meet emissions standards for nitrogen oxides (NOx), a family of poisonous gases that are formed when diesel fuels are burned at high temperatures.
The indictment alleges that Palma and his co-conspirators purposefully 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 and his co-conspirators allegedly referred to the manner in which they manipulated one method of emissions control as “cycle detection.” The indictment alleges that 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,” Palma and his co-conspirators purposefully misled FCA’s regulators by making it appear that the subject vehicles were producing less NOx emissions than they were in real world driving conditions. Palma and his co-conspirators allegedly calibrated the subject vehicles’ emission control systems to make them more attractive to FCA’s potential customers, i.e., by increasing fuel economy and reducing the frequency of a required emissions control system service interval, rather than to maximize the reduction of NOx emissions.
As further alleged in the indictment, Palma and his co-conspirators 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.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The FBI and EPA-CID investigated the case. Securities and Financial Fraud Unit Deputy Chief Henry P. Van Dyck and Trial Attorneys Kyle W. Maurer and Jason M. Covert of the Criminal Division’s Fraud Section, Senior Trial Attorney Todd W. Gleason of the Environment and Natural Resources Division’s Environmental Crime Section and Assistant U.S. Attorney Timothy J. Wyse of the U.S. Attorney’s Office for the Eastern District of Michigan are prosecuting the case. The Criminal Division’s Office of International Affairs also assisted in the case.