By Kevin Brenner | Friday, May 29, 2026

Not Good is not an indictment of the companies it covers. It is a study of the mistakes made inside them — by people prone to making them.

__________________________________________________________

“We apologise for the misconduct and the lack of judgment of individuals. We are convinced the scientific methods chosen then were wrong. It would have been better to do without such a study in the first place.” Volkswagen, January 2018.

Roughly four years separated the monkey tests from that apology. By then, Dieselgate had already moved from engineering problem to enforcement file: EPA notices, DOJ charges, felony pleas, prison sentences, and billions in fines, penalties, and settlements.

The Clean Diesel Campaign

By 2006, Volkswagen had one problem wearing two labels: product and marketing.

The company wanted to sell diesel cars in the United States as clean, efficient, and fun to drive. But its engineers could not build an engine that both complied with stricter U.S. nitrogen oxides (NOx) limits and delivered the performance and fuel economy the sales pitch promised. When those constraints collided, Volkswagen engineers designed software that could cheat standard U.S. emissions tests.

Volkswagen installed that software in the engine control unit. It could detect when a vehicle was undergoing standard U.S. emissions testing on a dynamometer. During testing, emissions controls engaged and the car appeared compliant. In normal driving, those controls were reduced or switched off, and the vehicles emitted NOx at levels up to 40 times the legal limit. The gap between lab results and road performance was engineered. NOx is regulated for a reason. It is bad for the air and bad for our lungs.

EPA issued its first Notice of Violation on September 18, 2015, covering model year 2009 through 2015 2.0-liter diesel vehicles.

At the same time, Volkswagen was running a “Clean Diesel” campaign that included Super Bowl ads, social media campaigns, and print advertising, often targeting environmentally conscious consumers. The FTC later alleged that Volkswagen falsely marketed these cars as environmentally friendly, low-emission, emissions-compliant, and likely to retain strong resale value.

Functionally, Volkswagen was selling two versions of the same car: the one regulators saw in the lab, and the one customers drove on the road.

How They Got Caught

The break came from road testing, not a whistleblower.

In 2013, the International Council on Clean Transportation hired West Virginia University’s Center for Alternative Fuels, Engines and Emissions to conduct real-world emissions testing on three diesel vehicles using portable measurement systems. Testing ran during 2013 and 2014, with results published in 2014.

The results were not close. In real-world driving, Volkswagen’s Jetta exceeded the U.S. NOx standard by 15 to 35 times. The Passat exceeded it by 5 to 20 times. The BMW X5 tested alongside them was generally at or below the standard.

The comparison mattered. A small university study surfaced what Volkswagen already knew: the gap between engineered test results and real-world emissions.

Regulators pressed Volkswagen for an explanation. The company offered technical theories, then software updates. Follow-up testing showed limited improvement, and the investigation continued.

The Study That Proved the Wrong Thing

While regulators were pressing Volkswagen for answers, an industry-backed research group was trying to prove something else: that modern diesel was cleaner than older technology.

The European Research Group on Environment and Health in the Transport Sector, or EUGT, included Volkswagen, Daimler, BMW, and Bosch, although Bosch later left the group. EUGT hired the Lovelace Respiratory Research Institute in Albuquerque, New Mexico, to conduct an inhalation study. Lovelace was hired in or around 2014 and the study became public in 2018.

The design was straightforward: expose monkeys to diesel exhaust from two different vehicles and compare the results.

One vehicle was a Volkswagen Beetle with modern diesel technology. The other was an older Ford F-250 pickup believed to have less advanced filtration technology. The intended takeaway was clear: the newer vehicle would appear cleaner.

The experiments involved placing 10 macaque monkeys in sealed chambers for four-hour intervals. During the tests, the animals watched cartoons while inhaling diesel exhaust from the vehicles. The stated purpose was to show that modern diesel emissions controls had significantly reduced pollutants.

But the comparison had a fatal flaw. The Beetle used in the study was equipped with Volkswagen’s defeat-device software. Under test conditions, the car could run cleaner than it did in real-world driving. So the study did not measure typical on-road emissions. It measured emissions from a car optimized to look cleaner in a test.

The study was supposed to defend clean diesel. It became evidence of how far the story had drifted from the product.

My Read

The monkey study did not create Volkswagen’s legal exposure. The defeat device did.

But the study matters because it reflects the same underlying instinct: when the product failed to match the story, the company doubled down. The animal testing made that instinct harder to ignore —and the use of a Volkswagen vehicle equipped with defeat-device software made it harder to defend.

The timing matters. The monkey tests happened before the scandal became public. EPA issued its Notice of Violation in September 2015. Volkswagen pleaded guilty in March 2017. The monkey study became public in January 2018.

By then, Volkswagen’s legal problem was already clear. The company had sold vehicles that performed one way under regulatory testing and another way on the road. The monkey study did not change that. It just added a more shocking and sensational chapter to the same story already unfolding.

The Bill

In the U.S., Dieselgate produced two corporate guilty pleas, charges against multiple individuals, three EPA/CARB Clean Air Act consent-decree tracks, two FTC/class-action consumer settlement tracks, and a pile of related dealer, state, customs, financial, and securities resolutions. The U.S. bill alone moved past $25 billion once buybacks, lease terminations, repairs, consumer compensation, dealer payments, environmental mitigation, zero-emission vehicle investments, civil penalties, and criminal fines were stacked together.

The criminal case changed the posture. In March 2017, Volkswagen pleaded guilty to three federal felony counts: conspiracy to defraud the United States, commit wire fraud, and violate the Clean Air Act; obstruction of justice; and importing vehicles by false statements. The DOJ resolution totaled $4.3 billion: a $2.8 billion criminal penalty and $1.5 billion in civil resolutions for environmental, customs, and financial violations. VW also received three years of probation under an independent corporate compliance monitor.

The civil exposure had its own ledger. Between 2016 and 2017, Volkswagen entered into three partial settlements under the Clean Air Act, resolving allegations by the United States (on behalf of EPA) and California that it had sold approximately 590,000 model year 2009–2016 diesel vehicles equipped with defeat devices. The 2.0‑liter settlement required Volkswagen to spend up to $10.03 billion on consumer buybacks, lease terminations, vehicle modifications, and compensation, along with $2.7 billion for environmental mitigation and $2 billion for zero‑emission vehicle investments. A third settlement imposed a $1.45 billion civil penalty and injunctive relief designed to prevent future violations, including enhanced compliance controls, monitoring, and independent auditing.

The supplier case ran on its own track. IAV GmbH, a German engineering firm, pleaded guilty to one felony conspiracy count and paid a $35 million criminal fine. DOJ said IAV worked with VW to design, test, and implement cheating software, and that an IAV employee helped design software that recognized when a vehicle was undergoing U.S. emissions testing. In other words, the defeat device had a supply chain.

Two Volkswagen individuals were convicted and sentenced in the United States: James Liang and Oliver Schmidt.

Liang was a senior diesel engineer. He helped make the defeat device work by calibrating it to recognize specific U.S. emissions-test drive cycles. Liang then moved to California, where he held the title “Leader of Diesel Competence” and helped support the U.S. “clean diesel” rollout. He ultimately cooperated with investigators and pleaded guilty to one count of conspiracy to defraud the U.S., commit wire fraud, and violate the Clean Air Act. Even with cooperation, Liang received 40 months in prison, two years of supervised release, and a $200,000 criminal penalty.

Schmidt ran Volkswagen’s U.S. Environment and Engineering Office. He admitted that he conspired with other Volkswagen employees to mislead U.S. regulators and customers, knowing the company’s diesel vehicles used defeat devices to cheat emissions tests. He participated in efforts to craft deceptive responses to regulators and, under management direction, sought approval for additional vehicle sales without disclosing the fraud. Schmidt pleaded guilty to conspiracy and a substantive Clean Air Act count. He received 84 months in prison and a $400,000 criminal penalty.

Geography mattered. Other indicted defendants were believed to be in Germany, which made U.S. prosecution far harder in practice. Germany generally does not extradite German nationals to the United States; German constitutional law permits extradition of German citizens only to EU member states or certain international courts.

The most visible U.S. target was Martin Winterkorn, Volkswagen’s former CEO. His indictment was unsealed in May 2018, charging him with conspiracy and wire fraud. Prosecutors alleged he was told about the emissions cheating in 2014 and again in 2015, then agreed with other senior executives to keep concealing it from U.S. regulators. Germany later initiated proceedings against Winterkorn, but those proceedings were delayed and suspended due to health issues. He has denied wrongdoing.

Outside the United States, Dieselgate’s individual accountability mostly played out in Germany. DOJ charged former Audi manager Giovanni Pamio in 2017 with conspiracy, wire fraud, and Clean Air Act violations, alleging that he led the Audi emissions-control team and directed software functions designed to cheat U.S. emissions tests. DOJ later charged four more Audi managers in the same alleged scheme. The U.S. Audi cases did not produce U.S. convictions or sentences. The consequences came in Germany: Pamio accepted a plea deal and received a suspended sentence and €50,000 fine; former Audi executive Wolfgang Hatz received a two-year suspended sentence and €400,000 fine; and former Audi CEO Rupert Stadler became the highest-ranking executive convicted, receiving a 21-month suspended sentence and €1.1 million fine after admitting he had failed to do enough to stop sales of affected cars.

Germany convicted four former Volkswagen managers in May 2025. Jens Hadler, the former head of diesel-engine development, received four and a half years in prison. Hanno Jelden received two years and seven months. Heinz-Jakob Neusser received a suspended sentence of one year and three months. A fourth manager, identified as Thorsten D., received a suspended sentence of one year and ten months.

Hadler drew the longest sentence because he had authority. The court said his “word had meaning within VW,” that he was heard by superiors, and that he “had the capacity to stop things.”

That is the compliance lesson in one sentence: compliance risk becomes personal risk when someone with authority knows the truth and keeps the machine running.

What Went Wrong Inside

The easy version: bad product, bad strategy, bad outcome.

The useful version is harder, and more familiar.

The marketing got ahead of the compliance reality. Volkswagen was selling “clean diesel” while affected vehicles were running software designed to cheat emissions testing. A gap like that can look manageable inside the company. It gets treated differently once it appears in a government complaint.

Nobody appears to have stopped on the test-car question. Lovelace was an independent lab, not Volkswagen’s engineering team. But the EUGT-commissioned test used a Beetle equipped with illegal cheating software. Any lawyer, scientist, or compliance officer reviewing the protocol had one basic job: ask what car is being used, how it is configured, and whether its lab behavior matches its road behavior.

If anyone asked, the answer did not stop the project.

The Winterkorn indictment gives the cleaner example of how Volkswagen handled inconvenient facts. Bernd Gottweis was a senior VW manager responsible for product safety issues. DOJ alleged that, after the ICCT study showed sharply elevated NOx emissions, Gottweis met with engine-development employees, said he needed to speak with Winterkorn immediately, and wrote a memo warning that VW could not give regulators a solid explanation for the results. He also warned that authorities might investigate whether the cars contained test-recognition software. VW continued denying emissions cheating anyway.

That is the significance. The issue had moved from technical anomaly to known legal risk. The company kept managing the story instead of disclosing the problem.

Dissolving the entity did not destroy the record. EUGT was dissolved in 2017. The approvals, emails, meeting minutes, budgets, and assumptions behind the study remained.

The compliance problem became a credibility problem. Once regulators, prosecutors, civil plaintiffs, and reporters reconstructed the timeline, every prior technical explanation, marketing claim, and research project was read against the same question:

Who knew the vehicles performed differently in the lab than on the road, and what did they do with that knowledge?

When the answer is “a lot of people, for a long time, and the conduct continued,” the company is no longer managing a product defect. It is managing the inference that follows.

How to Avoid Becoming the Next Cautionary Tale

If you are using something called a “defeat device” in relation to product testing, stop there and do something different.

Don’t use research to paper over unresolved compliance gaps. If the product cannot support the claim, fix the product, narrow the claim, or disclose the gap. Any study built to support a commercial narrative will eventually be tested against the product’s actual performance.

And regulators and plaintiffs will get the record.

Give outside researchers the facts that matter. If the test conditions, product configuration, data set, sample population, or operating environment differ from real-world use, say so. A study is only defensible if the people running it understand what they are measuring.

Treat industry groups, sponsored research, and third-party labs as record creators, not buffers. Funding a project creates evidence: who approved it, what they were trying to prove, what they knew, and what they chose not to ask.

Before approving the project, ask how it reads in discovery. The risk is simple: a company funds a study to prove a product is safe, compliant, or effective while internal facts point the other way. The test conditions are curated, the disclosures are thin, and the result is used to support a claim the product cannot carry. Someone in legal, compliance, or senior management needs the authority, and the spine, to stop that project before it creates the record.

Not after.

Click Here to Schedule a 30 minute Consultation with Kevin Brenner

This blog post is for informational purposes only and does not constitute legal advice. The discussion of this matter, including the conduct of any individuals involved, is based solely on publicly available information and court filings. Nothing in this post should be interpreted as a statement of fact about any person’s character, intentions, or actions beyond what has been reported in official sources.

The analysis provided reflects general legal principles and commentary and may not apply to any specific situation. Reading this post does not create an attorney-client relationship with the author or their firm. If you have questions about how these issues may affect your organization, you should consult qualified legal counsel.

The information provided on this website is for general informational purposes only and should not be considered legal advice. No attorney-client relationship is created by accessing or using this website. Please consult with a qualified attorney before making any legal decisions. Global Link Law is not liable for any reliance on the information provided. Prior results do not guarantee a similar outcome.