GM May Face Federal Wire Fraud Charges Over Ignition Defect

We recently told you that prosecutors were considering bringing criminal charges against General Motors over the long-delayed ignition switch recall that resulted in more than 100 deaths, and now the picture is becoming clearer as to what charges the car maker might face.

While additional charges could be brought, the Wall Street Journal reports that prosecutors are looking at reaching a deal with GM to settle wire fraud claims in the coming months.

In effect, the allegations would not be about whether GM made unsafe vehicles, but whether GM deliberately misled consumers about the safety of those vehicles.

The defective ignition switches in Chevy Cobalts and other GM vehicles could be inadvertently turned off while the car was in operation, thus disabling power steering, braking, and airbags. While top GM executives claim to have been unaware of the problem, engineers at the car maker knew about the issue and quietly changed the switch without alerting consumers or regulators.

It wasn’t until 2014, more than a decade after the first defective vehicles hit the road, that GM issued a recall. At the time, the company acknowledged only 13 deaths tied to the problem. However, an independent compensation fund set up to review death and injury claims related to the recall now admits to more than 100 fatalities.

The charges could be similar to the ones that resulted in Toyota paying $1.2 billion in 2014 to defer prosecution over that car company’s sudden unintended acceleration issues.

Like Toyota, GM could ultimately reach a deferred prosecution deal. That would save the company from the implications of a guilty plea while still requiring it to pay a substantial financial penalty. It’s possible that some individuals at GM could face charges.

“We are cooperating fully with all requests from the [Justice Department], as we have from the beginning,” reads a statement from GM about the investigation. “Our approach with the recall has been to be as open and transparent as possible—and that has certainly been the case with this investigation.”