The Securities and Exchange Commission (SEC) alleged the German carmarker issued $13bn in bonds and securities in US markets – despite knowing that more than half a million of their vehicles were well over legal limits for emissions.
The company is also accused of making false and misleading statements about vehicle quality, environmental compliance and its financial status. Volkswagen said it would contest the SEC lawsuit.
The SEC said: “By concealing the emissions scheme, Volkswagen reaped hundreds of millions of dollars in benefit by issuing the securities at more attractive rates for the company, according to the complaint.”
The complaint, filed in California, charges Volkswagen AG, its American subsidiaries and Martin Winterkorn with violating antifraud laws.
In 2015, Volkswagen installed software on almost 500,000 cars that cheated emissions tests, according to the US Environmental Protection Agency. Nitrogen oxide emissions were reduced when the cars were put on a test machine, but levels were higher during normal driving.
The US Department of Justice sued the company over the software in 2016; the Federal Trade Commission also sued over the claims made in adverts promoting some vehicles as “clean diesel”.
Winterkorn resigned over the fraud and pleaded guilty to criminal charges in the US but has maintained he personally did nothing wrong. The SEC now wants to bar him from holding any corporate office or directorship.
The company has paid $20bn in fines and civil settlements to date.
“Regrettably, more than two years after Volkswagen entered into landmark, multibillion-dollar settlements in the United States with the Department of Justice, almost every state and nearly 600,000 consumers, the SEC is now piling on to try to extract more from the company,” Volkswagen said in a statement.
The decision to sue comes just a day after the company’s chief executive, Herbert Deiss, apologised for evoking the Nazi concentration camp slogan “arbeit macht frei” meaning “work sets you free”.
In a meeting on Tuesday, Mr Deiss said “Ebit macht frei” – meaning the company’s profitability would give it freedom. Ebit is a financial acronym meaning “earnings before interest and tax”.
Additional reporting by agencies