VW diesel probe focuses on missing phones: 'bright red flag,' says FTC


2016 Volkswagen Passat SEL long-term test

2016 Volkswagen Passat SEL long-term test

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As Volkswagen aims to resolve numerous lawsuits related to its use of illegal "defeat device" software in diesel cars, federal agencies are continuing their criminal investigations of the company's actions.

As part of its investigation, the Federal Trade Commission (FTC) is now seeking more information on whether Volkswagen destroyed cell phones in a ploy to hide evidence.

At issues are 23 phones that are unaccounted for, and may hold information relevant to the investigation, according to the FTC.

DON'T MISS: VW 3-liter diesel updates OKed, but buyback negotiations continue

The missing phones constitute a "bright red flag," the FTC said in a December 8 court filing, according to Bloomberg.

In the filing, the agency called on a judge to order further questioning of a company witness in relation to the missing phones.

Volkswagen Group of America said its "designated corporate witness" had already answered thousands of questions during a deposition.

2014 Volkswagen Passat TDI

2014 Volkswagen Passat TDI

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But the FTC contended that the witness—Manuel Sanchez—was "either unprepared or otherwise unable to provide responsive information."

Sanchez "answered 'I don't know' or some variation thereof" over 250 times, including when asked questions "he should have been able to answer," the FTC said.

Among those questions were inquiries about whether the 23 phones had been lost or "wiped," according to the agency.

ALSO SEE: VW has criminal charges too; does Audi trans cheat make settling harder?

VW lawyers argued that the FTC's motion was an attempt to "apply litigation pressure" as the automaker negotiated with regulators over a settlement for 83,000 3.0-liter V-6 diesel vehicles.

A preliminary agreement for those cars was announced Wednesday, but some details must still be worked out and the overall plan must be approved by a federal judge.

As with the approved settlement for 2.0-liter 4-cylinder models, the agreement calls for cars to either be modified to meet emissions standards or bought back from their owners.

2014 Volkswagen Touareg TDI

2014 Volkswagen Touareg TDI

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Volkswagen also contended that the FTC's motion related to the missing phones was a ploy to obtain information on the investigation currently being conducted by law firm Jones Day.

The automaker commissioned Jones Day to conduct an investigation into the diesel scandal, but results have not been released to the public.

But if VW did indeed destroy evidence related to the scandal, that will only add to its mounting legal issues.

MORE: Porsche too said to use 'defeat device' software for gasoline cars

"The FTC could consider it a false and misleading trade practice to for the company to make public claims that it is cooperating with regulators," University of Michigan law professor Erik Gordon told Bloomberg.

That could add more fines on top of the existing costs of addressing the diesel scandal, as well as make rebuilding Volkswagen's reputation in the U.S. that much harder.

The scandal has already cost the company upwards of $20 billion, with dozens of suits in multiple countries still in litigation.

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