The United States Justice Department’s investigation into General Motors (“GM”) over the automobile manufacturer’s handling of faulty ignition switches might be leading to criminal charges against the company. GM had recalled over two and a half million of its Chevrolet Cobalt and other models last year after learning that a problem with the ignition switch could cause the engine to suddenly cut off. GM wound up recalling thirty million vehicles in 2014, an all-time yearly high.
The ignition problem has supposedly led to 104 deaths. It is not clear yet whether criminal charges will be filed by the Manhattan United States Attorney’s office against individual GM personnel, several of whom had been fired due to the ignition problem, but is expected that any penalties imposed would be expensive and probably at a record level. (Japanese automobile manufacturer Toyota paid over a billion dollars in fines last year for hiding a sudden acceleration problem occurring in its vehicles.) GM has already paid $35 million in civil fines for failure to give timely notice of the ignition problem.
General Motors is an American corporation founded in Flint, Michigan in 1908. It produces vehicles under thirteen brands in over three dozen countries, employing over two hundred thousand people. After emerging from a Chapter 11 reorganization several years ago it continues to be one of the world’s largest automobile makers, earning several billion dollars per year. It is possible that GM could be subject to fraud penalties for failing to disclose the ignition problem in its bankruptcy filing.