Share This Page

Justice Department could use $1.2B Toyota fine as template across industries

| Wednesday, March 26, 2014, 12:01 a.m.
Getty Images
WASHINGTON, DC - MARCH 19: U.S. Secretary of Transportation Anthony Foxx (L) speaks as Attorney General Eric Holder (R) listens during an announcement at the Justice Department March 19, 2014 in Washington, DC. The Justice Department announced a deferred prosecution agreement with a $1.2 billion fine regarding Toyota Motor Corporations misleading to its consumers on the unintended acceleration issues in the cars the company manufactured. (Photo by Alex Wong/Getty Images)

WASHINGTON — Federal prosecutors are considering using the legal theory behind a $1.2 billion penalty imposed on Toyota to go after misconduct in industries ranging from auto and airplane makers to mining, a Justice Department official told Reuters.

The charges of wire fraud against Toyota for concealing safety problems marked the first criminal case of its kind against an auto company. The announcement last week of the settlement between the Department of Justice and Toyota immediately prompted speculation about its ramifications for General Motors, which is under investigation over its handling of a problem with ignition switches.

Prosecutors generally have used a narrower approach in criminal cases against companies for misleading the public over safety issues. Pharmaceutical firms, for example, have been prosecuted under a law that makes it a crime to market drugs for uses other than those that have been approved as safe by the FDA.

Auto companies, too, are subject to a specific law that makes it a crime for them to mislead regulators about safety defects.

Rather than prosecute Toyota under that law, known as the TREAD Act, the Justice Department relied on a broad theory arguing that misleading statements about major safety issues constitute wire fraud.

That theory could be applied across industries, including against companies that build planes or trains, or potentially the mining and oil sectors, the DOJ official and legal experts said.

“A case of this size is designed to set an example to entire industries,” said Brandon Garrett, a University of Virginia Law School professor and expert on corporate crime.

“This isn't a cautious foray into criminal investigations and prosecutions in the auto area,” he said. “This case is designed to send a big message.”

The framework gives prosecutors the ability to go after industries that haven't been subject to much criminal prosecution in the past.

Criminal cases involving corporate malfeasance are often hard to prove against specific individuals, so it is unclear whether the Justice Department's new framework could also target executives responsible for the conduct. No Toyota executives were charged for their roles in the misconduct.

While he did not refer to GM specifically, Attorney General Eric Holder said when announcing the Toyota deal that he expected that settlement to serve as a model for how prosecutors would approach future cases involving “similarly situated companies.”

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.