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Former employee sues VW while investors file $3.6 billion lawsuit against the automaker.

Posted in News

Alleged Whistleblower Says Volkswagen Destroyed Evidence
Former employee sues VW while investors file $3.6 billion lawsuit against the automaker.

— Volkswagen is currently preparing to defend itself against 500 lawsuits filed in the U.S. after the automaker was forced to admit six months ago that it cheated the world concerning diesel emissions.

About 11 million diesel vehicles worldwide have illegal software that causes vehicles to emit up to 40 times above legal limits for nitrogen oxide emissions. Now those emission problems have caused two new lawsuits, one from a former employee and the other a $3.6 billion lawsuit filed by investors.

Investors Sue VW for $3.6 Billion

The automaker is looking at the possibility of $3.6 billion in damages if 278 investors get their way in a German court. The lawsuit, filed by German insurers and U.S. pension fund holders, accuses VW of neglecting its financial duties between June 2008 and September 2015. The lawsuit comes on the heels of a similar lawsuit filed by retail investors in October 2015.

While the majority of lawsuits against Volkswagen were filed by vehicle owners, dealers and state governments, investors say they were also bamboozled by VW's fraud.

For a period of seven years, investors believed their money was wisely invested in a company on its way to becoming the No. 1 automaker in the world. Seven years of hopes and dreams have went up in smoke along with VW's reputation and stock.

Volkswagen argues it delayed letting the public and investors know about the cheating scandal to be in a better position to deal with regulators in the U.S. VW says letting investors know about the emissions problems would have jeopardized any potential settlement with the U.S.

American regulators learned of the emissions defeat devices on September 3, 2015, when Volkswagen finally admitted it cheated, but the public didn't learn of the scam until September 18. VW says it wasn't trying to hide anything from investors, a strange argument to make considering the automaker lied to the world and investors for seven years.

Volkswagen also told investors that company executives didn't learn about the illegal emissions devices until the public learned of it in September 2015. However, VW has admitted former CEO Martin Winterkorn was told in a May 2014 memo about faulty emissions tests in the U.S.

VW Employee Whistleblower Lawsuit

As a March 24 deadline approaches for Volkswagen to respond to U.S. regulators about how more than 600,000 diesel vehicles will be repaired, the automaker has learned about a serious lawsuit filed by a former employee.

Daniel Donovan, fired by the automaker in December 2015, filed the lawsuit in Oakland County Circuit Court in Pontiac, Michigan. Donovan claims in the lawsuit he was fired because he refused an order to destroy evidence concerning illegal nitrogen oxide emissions in about 600,000 diesel vehicles in the U.S.

Donovan says Volkswagen obstructed justice by destroying documents after the Justice Department told VW to hold all evidence related to the vehicles. The lawsuit alleges the automaker continued to delete evidence for three days after the Environmental Protection Agency learned the diesel vehicles were breaking the law.

In the lawsuit, Donovan says he worked at Volkswagen for seven years, ending as an employee in the office of general counsel. He claims employees weren't saving back-up data and disks, in a direct rejection of an order from the federal government.

The lawsuit alleges Donovan was fired because the automaker believed he was about to report the alleged cover-up to the EPA, the U.S. Department of Justice or the Federal Bureau of Investigation. Mr. Donovan claims by firing him for speaking up, VW violated the Michigan Whistleblowers' Protection Act.

VW responded to the lawsuit by saying the emissions subject had nothing to do with why Mr. Donovan was fired and his lawsuit is without merit.


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