Thursday, September 17, 2015

GM agrees to $900 million criminal settlement over ignition-switch defect

General Motors - whose cultural of evasion of responsibility was explored by the `Valukas report' it commissioned to the law firm Jenner & Block - has taken  three steps to resolve its problems. It has reportedly reached a settlement with the Department of Justice - avoiding prosecution; settled the shareholders action arising from its concealment of the now notorious ignition switch defects; and settled about half of the personal injury litigation managed in the MDL known as In Re General Motors Ignition Switch Litigation. - gwc

GM agrees to $900 million criminal settlement over ignition-switch defect

by NathanBomey // USA Today

General Motors agreed to pay $900 million and accept two criminal charges to resolve a Justice Department investigation into its handling of a deadly ignition-switch blamed for more than 120 deaths.

Federal prosecutors said in a court filing Thursday that GM had agreed to accept a wire-fraud charge and a charge for "engaging in a scheme to conceal a deadly safety defect" from regulators.

GM engineers, attorneys and mid-level executives failed to fix the defect for more than a decade. As part of the settlement, GM admitted to having defrauded customers by marketing its vehicles as safe during that period.

Separately, GM reached a deal to extend settlement offers to up to 1,385 additional victims of its deadly ignition-switch defect. GM also confirmed that it has settled a shareholder lawsuit over its handling of the matter — with the two deals collectively accounting for a $575 million charge on its third-quarter earnings.

U.S. prosecutors are expected to discuss their settlement with GM in a noon press conference in New York. GM CEO Mary Barra and product chief Mark Reuss plan to address the matter in a town hall with employees at 2 p.m.

No individual GM employees will be prosecuted, though prosecutors noted in the settlement documents that GM had fired "wrongdoers."

Barra, who did not know about the defect until days before it was publicly disclosed in February 2014, dismissed about 15 employees after an internal investigation blamed those workers for failing to disclose or fix the deadly flaw.

She apologized to the public and authorized a settlement fund for victims. Before Thursday's deal with additional victims, the automaker had already agreed to offer settlements for families of 124 people who were killed and 275 who were injured.

Those deals were offered through an independently administered settlement fund established last year with a deadline for victims interested in compensation and willing to relinquish their rights to sue.

People who opted to sue GM instead of taking the deal may get compensated as part of the settlement announced Thursday by Texas attorney Bob Hilliard, who was appointed by a federal judge to negotiate with the automaker on behalf of individual plaintiffs.

Lauren Gomez, a spokeswoman for Hilliard, said in an email that another 370 potential injury victims and families of another 84 potential victims who were killed are not part of the deal. Hilliard will continue to pursue lawsuits in those cases.

It was not immediately clear how many of the 1,385 additional plaintiffs who may qualify for settlements are tied to fatal cases or injury crashes. GM spokesman Pat Morrissey said he could not disclose that information.

GM said the plaintiffs, which it said numbered 1,380, represent more than half of the personal-injury lawsuits it faces.

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