Sunday May 31, 2020

updated - May 31, 2020 Sunday EDT

U.S. Justice Department Announces Deferred Prosecution Agreement with GM, includes $900 Million Forfeiture

Sep 18, 2015 02:24 AM EDT | By Jean-Claude Arnobit
General Motors, U.S. Justice Department, settlement, criminal charges
U.S. Justice Department Announces Deferred Prosecution Agreement with GM, includes $900 Million Forfeiture
(Photo : Spencer Platt | Getty Images News)

The U.S. Justice Department has just announced in a press release the filing of criminal charges against General Motors Co. (GM) for concealing a potentially deadly safety defect from the National Highway Traffic Safety Administration (NHTSA).

The filing also comes with a deferred prosecution agreement with GM that requires it to transfer $900 million to the United States by no later than Sept. 24, 2015.

Under the terms of the agreement, the automaker will admit that it failed to disclose the defect to the NHTSA and misled U.S. consumers about the same defect, according to the press release.

The agreement also imposes an independent monitor to review and assess practices and procedures relating to GM's safety-related public statements, sharing of engineering data and recall processes.

GM will also have to agree to the forfeiture of the $900 million that it will transfer as pursuant to a parallel civil action also filed today in the Southern District of New York, according to the press release.

If GM abides by all of the agreements, the prosecution on the information will be deferred for three years, and then the government will seek to dismiss the charges.

Attorney General Loretta E. Lynch said in the press release that consumers have "the right to expect" that car companies will be "taking their safety seriously."

"The Department of Justice is committed to ensuring that the products Americans buy are safe; that consumers are protected from harm; and that auto companies follow the law," she said,

U.S. Attorney Preet Bharara of the Southern District of New York also said in the press release that GM has failed to disclose the safety defect to the public and regulators for two years.

"By doing so, GM put its customers and the driving public at serious risk," Bharara said. "Justice requires the filing of criminal charges, detailed admissions, a significant financial penalty, and the appointment of a federal monitor."

ABC News reported that GM has recalled 2.6 million older small cars worldwide like the Chevrolet Cobalt and Saturn Ion last year to replace the faulty switches.

The switches can slip out of the run position unexpectedly to off or accessory.

ABC News also reported that the slip out can shut off the engine and disables the power-assisted steering, power brakes, and air bags.

The problem has caused crashes that killed at least 124 people and injured 275 more. The report said there are lawyers in charge of a fund set up by GM to compensate victims, said.

The Wall Street Journal adds that the settlement will help close the book on one front of GM's safety crisis.

The crisis has tarnished the company's reputation among consumers, reduced its offers and has dampened its recovery from bankruptcy.

Get the Most Popular Franchiseherald Stories in a Weekly Newsletter
© 2015 Franchise Herald. All rights reserved.

Connect With Franchise News

Email Newsletter


  • RANK
  • 1nc
    Hampton Hotels
    $3.7M - 13.52M
  • 2nc
    $85.2K - 260.35K
  • 3up
    Jiffy Lube Int'l. Inc.
    $196.5K - 304K
  • 4down
    7-Eleven Inc.
    $30.8K - 1.64M
  • 5up
    $103.55K - 196.5K
  • 6up
    Anytime Fitness
    $56.3K - 353.9K
  • 7down
    $133.05K - 181.45K
  • 8down
    Denny's Inc.
    $1.18M - 2.4M
  • 9down
    $1M - 2.16M
  • 10down
    Pizza Hut Inc.
    $295K - 2.15M
Real Time Analytics