Toyota $1.2 Billion Deal OK'd to End Criminal Probe
NEW YORK -- A U.S. judge signed off on Toyota Motor's (TM) $1.2 billion settlement of criminal charges that it concealed safety problems in its vehicles, an accord that could serve as a model for a similar probe into General Motors (GM).
U.S. District Judge William Pauley approved the Japanese automaker's deferred prosecution agreement at a hearing Thursday in Manhattan.
His approval came one day after the U.S. Department of Justice said it resolved its investigation into problems that caused Toyota vehicles to accelerate suddenly.
Pauley said the case presented a "reprehensible picture of corporate misconduct," and expressed hope that the government would ultimately hold the responsible decisionmakers at Toyota accountable.
"This unfortunately is a case that demonstrates that corporate fraud can kill," he said.
Pauley ruled shortly after Christopher Reynolds, Toyota's North American legal chief, entered a "not guilty" plea on behalf of the automaker to one count of wire fraud.
The $1.2 billion settlement is the largest such penalty ever levied by the United States on an auto company. It resolves issues that have dogged Toyota since at least 2007 and have been linked to at least five deaths. Toyota still faces hundreds of private lawsuits.
The settlement marked a huge victory for safety advocates who fought for years for criminal prosecution of automakers over safety violations.
Toyota agreed to a so-called statement of facts, %VIRTUAL-article-sponsoredlinks%in which it admitted to having misled U.S. consumers and a federal regulator about two problems that caused cars to accelerate even if drivers tried to slow them down.
No guilty plea was required, and the government agreed not to prosecute Toyota for wire fraud for three years. The charge will be dismissed in 2017 if Toyota follows the terms of the accord, which include allowing an independent monitor to review its safety practices.
A spokeswoman for Toyota declined to comment, as did a spokeswoman for U.S. Attorney Preet Bharara in Manhattan.
U.S. authorities are investigating GM over its handling of an ignition switch defect linked to 12 deaths, and which resulted in a recall last month of more than 1.6 million vehicles, mostly in the United States.
Attorney General Eric Holder told reporters Wednesday that he hoped the Toyota deal would "serve as a model for how to approach future cases involving similarly situated companies."
The Toyota investigation flowed out of publicity starting in 2009 over unintended acceleration linked to at least five deaths, and which prompted hundreds of lawsuits.
Last year, a federal judge approved a settlement valued at $1.6 billion to resolve claims by Toyota owners that the value of their cars dropped because of the negative publicity.
The case is U.S. v. Toyota Motor Corp., U.S. District Court, Southern District of New York, No. 14-cr-00186.
-Additional reporting by Ben Klayman in Detroit.