U.S. judge dismisses part of diesel criminal case against Fiat Chrysler engineer

By David Shepardson

WASHINGTON (Reuters) – A judge in Detroit on Tuesday dismissed a portion of a criminal case against a Fiat Chrysler senior manager who was charged as part of the government’s probe into cheating on diesel emissions tests by the automaker.

Emanuele Palma was charged in September 2019 with making and causing Fiat Chrysler to make misstatements to U.S. regulators about diesel engines’ emission control systems and wire fraud.

Of the 13 count indictment, U.S. District Court Judge Nancy Edmunds dismissed four counts and a portion of one count – all relating to wire fraud, ruling the causal connection between the alleged deceit and customers’ loss of money was “tenuous at best.”

Palma, an Italian citizen and auto engineer, is set to go trial in April 2021.

The U.S. Attorney’s Office in Detroit, Fiat Chrysler and lawyers for Palma did not immediately comment late Tuesday.

U.S. officials embarked on a wide-ranging investigation into diesel emissions cheating in the auto industry after Volkswagen AG admitted in September 2015 to using secret software to evade emissions rules.

Nine people have been charged in the Volkswagen probe, while only Palma has been charged in the Fiat Chrysler case. Two people charged in the Volkswagen case received prison sentences after pleading guilty, while the other seven including former CEO Martin Winterkorn remain abroad and have never made U.S. court appearances.

Fiat Chrysler in January 2019 agreed to an $800 million settlement to resolve civil claims from the Justice Department, California Air Resources Board and vehicle owners that it used illegal software which produced false results on diesel-emissions tests.

Last month, the Italian-American automaker recognized a new 222 million euro ($263 million) provision to settle matters primarily related to the DOJ’s ongoing criminal probe into diesel emissions.

Fiat Chrysler said at the time that settlement talks were ongoing and it was not clear if an agreement would be reached.

It separately agreed in September to pay $9.5 million to settle allegations by the Securities and Exchange Commission that it misled investors over its compliance with emissions regulations.

(Reporting by David Shepardson; Editing by Edwina Gibbs)