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$1 Billion in Criminal Penalties for Defective Auto Parts

Thursday, March 02, 2017
Sandler, Travis & Rosenberg Trade Report

The Department of Justice reports that a Japanese company has been sentenced to pay $1 billion in criminal penalties after pleading guilty to a 15-year scheme to misrepresent the safety of equipment the company supplied to automakers. DOJ officials expressed hope that this sentence “will send a message to suppliers of consumer safety products that they must put safety ahead of profits.”

The penalty amount includes $975 million in restitution ($125 million for injured individuals and $850 million for auto manufacturer recall and replacement costs) and a $25 million fine. The company will also implement rigorous internal controls, retain an independent compliance monitor for three years, cooperate fully with the DOJ’s ongoing investigation (including its investigation of individuals), and serve three years’ probation.

According to a DOJ press release, the company admitted to carrying out a scheme to defraud its customers and auto manufacturers by providing false and manipulated test data that made the performance of its products appear better than it actually was. Even after the items began to experience repeated problems in the field, company executives continued to withhold true and accurate test information and data from their customers. 

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