The head of VW Group's U.S. regulatory compliance group was arrested by the Federal Bureau of Investigation this weekend on charges of conspiracy to defraud the United States.
Oliver Schmidt led the German automaker's regulatory compliance during 2014 and the early part of 2015.
The Volkswagen diesel emission scandal erupted in September 2015 when the EPA announced that VW had admitted building "defeat device" software into its diesel cars to enable them to comply with emission tests while emitting up to 35 times as many nitrogen oxides as permitted by law.
Schmidt is expected to be arraigned in Detroit today, according to The New York Times and other sources. He was arrested in Florida.
A study conducted at West Virginia University and released early in 2014 showed major discrepancies between the legal emission limits and the real-world emissions of Volkswagen TDI diesel vehicles.
"Schmidt played a central role in trying to convince regulators that excess emissions were caused by technical problems rather than by deliberate cheating," the Times noted.
Consumer Reports tests 2015 Volkswagen Jetta TDI diesel in 'cheat mode,' October 2015 [video frame]
Former Volkswagen engineer James Liang pled guilty last fall to violating the Clean Air Act and conspiracy to defraud the U.S. government.
But Schmidt's arrest marks the first time that a Volkswagen executive has been charged with criminal behavior in connection with the diesel-emission scandal.
The company is reportedly nearing a deal to pay roughly $2 billion to both states that have sued it and the federal government to resolve numerous outstanding criminal charges.
Reports indicate that VW Group is close to an agreement to settle outstanding criminal charges before the new U.S. presidential administration takes office on January 20.
The EPA and the powerful California Air Resources Board recently approved modifications that will enable 2015 TDI vehicles from Audi and VW to meet the relevant emission standards, an alternative to the buyback that applies only to those vehicles using the new EA288 2.0-liter 4-cylinder diesel engine.
A spokesperson for Volkswagen declined to comment on news of the arrest, saying it would not be appropriate.