Reports of a federal criminal investigation surfaced just weeks after the company made its initial recall announcement. Prosecutors are said to be focusing on decade-old evidence of “misleading statements” to build their case, unnamed sources have told Reuters.
If the prosecutors decide to move forward with federal charges, they are expected to accuse the company of violating federal laws related to mail and wire fraud.
Fines have already been levied for failure to report the defect to the National Highway Traffic Safety Administration in a timely fashion. The current penalties, totaling into the tens of millions, could be overshadowed by a federal criminal settlement.
Analysts look to Toyota’s unintended-acceleration debacle as a potential parallel to GM’s current situation. The Japanese automaker paid a fine of less than $17 million in 2010 for failing to quickly disclose the defects, however federal prosecutors spent years building a separate criminal case that eventually squeezed the company for another $1.2 billion.
Federal charges, or lack thereof, could have an impact on the current legal battle GM has been fighting to maintain its liability shield against pre-bankruptcy claims. The company is also said to be facing separate criminal investigations at the state level.
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