Three attorneys general on Tuesday directly challenged Volkswagen’s defense over its emissions deception, calling the decision to thwart pollution tests an orchestrated fraud that lasted more than a decade, involved dozens of engineers and managers and reached deep into the company’s boardroom.
The accusations, leveled in lawsuits by New York, Massachusetts and Maryland, contradict Volkswagen’s portrayal of the deception, representing a new threat to the carmaker’s finances, reputation and management. For the first time, the suits connected Volkswagen’s chief executive, Matthias Müller, to the scandal, saying he was aware of a 2006 decision to not outfit Audi vehicles with equipment needed to meet American clean-air standards.
Volkswagen, which admitted late last year to equipping 11 million vehicles worldwide with software to cheat emissions tests, has maintained that the deception was limited to a small group of people. The company has said top management was not aware of the cheating software, known as a defeat device.
But the New York civil complaint, drawing on internal Volkswagen documents, emails and witness statements, depicts a corporate culture that allowed a “willful and systematic scheme of cheating.” The evidence paints the most detailed picture yet about how the deception unfolded and who was responsible.
The suits identified six different defeat devices, saying the deception was an “iterative process” that started with an Audi model. They described the device as a cost-saving measure, because meeting American emissions standards would have required an overhaul of the vehicles. The suits stopped short of accusing Mr. Müller of having specific knowledge of the devices.
At the time of the 2006 decision, Mr. Müller was head of project management at Audi, Volkswagen’s luxury car division. He became chief executive of Volkswagen in September, replacing Martin Winterkorn, who resigned days after the Environmental Protection Agency accused the company of the diesel deception that month.
“The idea that this level of fraud could take place and involve so many people at such high levels of a major international corporation is appalling,” Eric T. Schneiderman, the New York attorney general, said at a news conference in New York, describing what he called “a cunningly cynical fraud at the heart of this scandal.”
He was joined by the attorney general for Massachusetts, Maura Healey. The suits claim that the company made false statements to regulators and broke laws requiring cars to have approved pollution control systems.
Mr. Müller and Mr. Winterkorn have previously denied any involvement in the wrongdoing. “There is no credible evidence to support the allegation regarding Matthias Müller,” a Volkswagen spokeswoman, Jeannine Ginivan, said in an emailed statement. “It does not bear scrutiny.”
The potential blowback for Volkswagen could be costly.
The company last month agreed to pay nearly $15 billion, a record, to settle claims in the United States by Volkswagen owners and regulators. But the settlement did not resolve what penalties might be imposed on Volkswagen, leaving room for additional suits.
New York said Volkswagen was exposed to state penalties of over $500 million. Suits from Maryland, Massachusetts and other states that might follow will add substantially to that sum.
The company is also dealing with criminal investigations and shareholder lawsuits around the world. The United States Justice Department said it was still pursuing a criminal inquiry.
Volkswagen, Ms. Ginivan said, was already discussing a comprehensive resolution that would settle environmental issues nationwide and had already addressed many of the accusations with federal authorities. “It is regrettable that some states have decided to sue for environmental claims now,” she said.
The complaints break the silence that prevailed in Germany and the United States about the genesis of the scandal and who was involved.
The New York complaint claims that more than two dozen Volkswagen engineers and managers were involved in the deception, includingWolfgang Hatz, the former head of engine and transmission development at Volkswagen and Audi; Ulrich Hackenberg, former head of development for Audi; and Heinz-Jakob Neusser, former head of development for the Volkswagen brand. While several executives have been identified by the media, German prosecutors, because of the country’s strict privacy laws, have named only one suspect, Mr. Winterkorn.
The suit, filed in New York State Supreme Court in Albany, also criticized Volkswagen’s supervisory board for awarding 63 million euros (about $70 million) in salary and bonuses to Mr. Müller and other members of the management board last year. “Recent actions,” the complaint said, “demonstrate that the company’s culture that incentivizes cheating and denies accountability comes from the very top and, even now, remains unchecked.”
The deception, the complaint described, spanned more than a decade.
While scrutiny has focused on the Volkswagen brand, the use of defeat devices was pioneered by Audi, according to the complaint. Engineers at Audi developed a way to eliminate the clattering sound that diesel engines tend to make after starting. But the solution increased pollution to impermissible levels.
So Audi in 2004 programmed its diesels in Europe to turn off the noise reduction technology when software recognized that the cars were undergoing emissions tests, the complaint said. The defeat device was euphemistically labeled the “acoustic function.” The same software was later adapted for a new generation of diesel motors that could not meet American emissions standards.
The New York complaint is the first to explicitly present evidence that top managers, at the very least, were aware of the engineering problems that led to the use of defeat devices.
According to the New York suit, Mr. Müller and Mr. Winterkorn were informed in 2006 that Audis with 3-liter diesel engines needed additional equipment to meet American standards. Specifically, they needed a larger tank to hold the chemical solution used to neutralize nitrogen oxide emissions in the exhaust.
But Volkswagen and Audi, the complaint said, did not want to spend the money necessary to redesign the cars. Instead, the company decided to deploy defeat devices. Both Mr. Winterkorn and Mr. Müller held senior positions at the Audi unit at the time.
Documents used as evidence refer to “H. Müller,” according to the complaint. An Audi executive told investigators that was a reference to Matthias Müller, the current chief executive, the suit said.
The New York suit also takes aim at executives’ claims that they were ignorant of the defeat devices, citing their behavior when the threat of exposure loomed.
In early 2014, engineers at West Virginia University published a study in which two unidentified diesel cars were found to have emitted up to 40 times as much pollution on highways as they did under laboratory conditions. Inside Volkswagen, there was widespread alarm, the complaint said.
After it became clear that the cars in the study were Volkswagens — a 2012 Jetta and a 2013 Passat — company engineers in the United States were bombarded with requests for information by senior managers, including a management board member, Christian Klingler. He has since left Volkswagen for reasons the company said were not related to the scandal.
Over the next 17 months, Volkswagen embarked on a campaign to “mislead and confuse” regulators and the public, according to the complaint. In a conference call with California regulators in October 2014, Volkswagen officials “cited phony technical explanations for high emissions,” the suit said.
After learning in May 2015 that California regulators planned to conduct more thorough tests of Volkswagen diesels, executives’ emails “began to reflect desperation and panic,” the complaint said. One executive, facing questions from suspicious California officials, wrote to co-workers, “Come up with the story, please!”
“This is an example of a company that not only engaged in deception and fraud on a brazen scale but covered up that deception,” Ms. Healey, the Massachusetts attorney general, said at the news conference. The conduct “reflects a corporate culture that had no regard for the law, no respect for the American people and no regard for the environment or people’s health.”