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Federal prosecutors are poised to settle a criminal investigation into General Motors, according to people briefed on the matter, accusing the automaker of failing to disclose a safety defect tied to at least 124 deaths. The case, which the prosecutors plan to unveil on Thursday, would cap a wide-ranging investigation that tainted the automaker’s reputation for quality and safety and damaged its bottom line.

The prosecutors will impose a penalty of nearly $1 billion on G.M., according to people briefed on the matter who spoke on the condition of anonymity, but they are not expected to include charges against individual G.M. employees.

And although the penalty will stain General Motors’ reputation, the punishment from prosecutors fell short of a record for the auto industry. The size of the penalty, one of the people said, reflected a benefit that G.M. earned because of its cooperation in the investigation.

In recent months, some G.M. officials expected that the company would pay more than the $1.2 billion paid last year by Toyota for concealing unintended acceleration problems in its vehicles. The company also faced the possibility that it would have to plead guilty to a crime.

Continue reading the main story Interactive Feature A Record Year for Auto Recalls More vehicles, including old models, have been recalled in the United States in 2014 than ever before. Explore the size and scope of the recalls, and find out if your car has been affected. U.S. Said to Have Settled With G.M. Over Deadly Defect

OPEN Interactive Feature

Instead, G.M. has agreed to sign a so-called deferred-prosecution agreement, the people said, a deal that effectively amounts to probation for corporations.

Notably, G.M. employees are also expected to avoid indictment, though the investigation will most likely continue, according to the people briefed on the matter. After more than a yearlong inquiry into the defect — which involved faulty ignition switches that could unexpectedly turn off, cutting the engine and disabling airbags — federal prosecutors in Manhattan and the Federal Bureau of Investigation struggled to pin criminal wrongdoing on any one G.M. employee. They concluded instead that the problems stemmed from a collective failure by the automaker.

The settlement illustrates the limitations of new Justice Department rules that emphasize criminal charges against corporate employees. That initiative, announced last week in a memo to federal prosecutors across the country, represented a tacit acknowledgment of criticism that prosecutors have secured record fines from big banks and corporations, but few indictments of their employees.

“If a corporation plays nice and agrees to the terms, then the government gets some nice money, and the victims are just left in the dust,” said Susan Averill, the daughter-in-law of Jean Averill, who was killed in a 2003 crash of a Saturn Ion at the age of 81. Hers was the earliest fatality G.M. connected with the ignition defect. “It doesn’t seem right to me.”

The new Justice Department policy — which states that companies can no longer obtain credit for cooperating with the government unless they identify employees and turn over evidence against them — does not apply to the G.M. case. Sally Q. Yates, the deputy attorney general and the author of the memo, said in an interview last week that the changes would affect ongoing cases only to the extent that it was “practicable.”

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“We’re not going to renege on verbal agreements,” she said.

And in many ways, the new rules codify practices that were already in place at certain United States attorneys offices, including the office in Manhattan, which led the G.M. investigation. As such, the prosecutors most likely followed practices that mirror Ms. Yates’s memo when investigating the G.M. case.

The stumbling block to charging G.M. employees stemmed from a lack of evidence and a high legal burden, according to the people briefed on the matter. The wire fraud statute, which is typically used to prosecute auto cases, requires prosecutors to prove that someone intended to defraud, not just that the conduct was deceptive.

That burden stands in contrast to other industries, including food and pharmaceuticals, in which intent is not required to prove criminal wrongdoing. As The New York Times reported in July, the automotive industry spent nearly five decades beating back efforts to strengthen criminal penalties.

Still, prosecutors emphasize the importance of charging companies, even when it would be inappropriate to charge their employees, because such cases, prosecutors say, can act as a deterrent. For example, the case against Toyota was a warning to the automotive industry, which has been quicker to issue recalls ever since.

Continue reading the main story Interactive Feature Fatal Flaws: Crisis in Auto Safety The New York Times has exposed missteps and delays by automakers and federal safety regulators in responding to deadly defects in automobiles during what became a record year for recalls. U.S. Said to Have Settled With G.M. Over Deadly Defect OPEN Interactive Feature

And the G.M. investigation, along with pressure from lawmakers, has helped spur a wide-ranging reform of safety practices in the auto industry. The changes unfolded not only among automakers but also within the agency charged with overseeing them, the National Highway Traffic Safety Administration.

The announcement of the case against G.M. is planned for a news conference in Manhattan as soon as Thursday, according to the people briefed on the matter.

G.M. and the Justice Department declined to comment.

G.M.’s problems surfaced publicly in February 2014, when it begin recalling 2.6 million Chevrolet Cobalts and other small cars with the defective ignition switches. Soon after, evidence began to emerge that workers had been aware of clues pointing to the defect for more than a decade.

The company initially said that it knew of 13 deaths linked to the ignition flaw. Today, the death count stands at at least 124. G.M. has paid a heavy price not only in its reputation but also to its bottom line. It has set aside almost $4 billion to cover the cost of its recalls, which now extend far beyond the ignition switch, and it also paid $35 million penalty, a record at the time, for failing to disclose the defect to regulators in a timely manner.

In an internal investigation paid for by G.M. and released on June 5, the former federal prosecutor Anton R. Valukas painted a portrait of a dysfunctional organization, more incompetent than criminal. Within G.M., Mr. Valukas said, employees failed repeatedly to seize opportunities to disclose and fix the ignition defect for more than a decade, even as the company settled lawsuit after lawsuit related to the flaw and engineers complained to one another about the troubled cars.

Laura Christian, the birth mother of 16-year-old Amber Rose, who was killed in a July 2005 crash in Maryland, said she was shocked to hear that G.M. might pay less than Toyota paid to resolve its case.

“That’s giving G.M. and the other auto manufacturers permission to do it again,” Ms. Christian said. “And all of the people who were killed in these crashes, including my daughter, will have lost their lives in vain.”

Read more http://rss.nytimes.com/c/34625/f/640350/s/49eae996/sc/7/l/0L0Snytimes0N0C20A150C0A90C170Cbusiness0Cprosecutors0Esaid0Eto0Ebe0Enear0Ea0Ecriminal0Esettlement0Ewith0Egm0Bhtml0Dpartner0Frss0Gemc0Frss/story01.htm


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