Almost a year after news of Volkswagen's emissions cheating broke, an engineer pleaded guilty to charges related to the diesel scandal.

This is the first time a VW employee has been charged by the U.S. Justice Department in the agency's inquiry into the carmaker's use of illegal "defeat device" software to cheat on emissions tests.

The engineer, James Liang, entered his plea in Detroit federal court Friday, his lawyer saying that Liang was "one of many at Volkswagen" involved in the fraud.

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He spent 25 years working for Volkswagen in Wolfsburg, Germany, before moving to the U.S. in 2008 to become the company's U.S. head of "Diesel Competence."

Liang is cooperating with the emissions probe, which should put more pressure on higher-level VW officials, according to Bloomberg.

A settlement that includes offers of buybacks or modifications for affected TDI diesel models with 2.0-liter 4-cylinder engines has received preliminary approval from a federal judge.

2014 Volkswagen Passat TDI

2014 Volkswagen Passat TDI

But the Justice Department is continuing its criminal investigation into Volkswagen's actions.

Last month, the agency uncovered evidence that would qualify VW's actions as criminal, and began negotiations with the carmaker without filing any charges.

In its indictment of Liang, the government alleges that Volkswagen engineers realized almost immediately that the company's diesel engines would not meet U.S. emissions standards.

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The decision to develop "defeat device" software was made around 2006, when VW began development work on new engines to meet stricter U.S. "Tier 2, Bin 5" standards that would take effect for the 2009 model year.

"I know VW did not disclose the defeat device to U.S. regulators in order to sell cars in the U.S.," Liang told a judge Friday.

The software—which allowed cars to detect the conditions of a laboratory emissions test and alter engine parameters—was variously referred to by engineers as "acoustic function," "cycle beating software," and "emissions-tight mode."

2010 Volkswagen Golf TDI

2010 Volkswagen Golf TDI

Even after VW deployed the "defeat device" without attracting attention from regulators, engineers faced another issue in keeping the illegal software a secret.

At one point, warranty claims related to emissions-control systems began to rise.

MORE: VW diesel deception known by highest execs, lawsuits say

Some of Liang's colleagues believed this was related to cars operating in the low-emission mode meant only for laboratory tests.

So in 2014 the engineers updated the software, issuing a service campaign and telling customers it was for something unrelated.

2015 Volkswagen Golf TDI

2015 Volkswagen Golf TDI

Liang pleaded guilty to a charge of conspiracy to commit fraud against U.S. regulators and Volkswagen customers, and to violate the Clean Air Act.

He faces a maximum penalty of five years in prison and a fine of up to $250,000, or twice the gross gain or loss.

Liang is to be sentenced January 11, 2017.


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