Bloomberg reports VW engineer James Liang pleaded guilty to conspiracy to commit fraud on Friday.
Liang has submitted the first guilty plea for an individual in the Volkswagen scandal.
The 62-year-old German citizen, who lives in Newbury Park, California, appeared in U.S. District Court in Detroit on Friday and entered into a plea agreement that includes his cooperation with the government in its investigation. Liang told the court he and his colleagues realized the diesel engines would not meet US emissions standards, so they designed software to recognize when the cars were being tested. They were the first US criminal charges in the Volkswagen case, where the company sold about 500,000 cars loaded with software that cut back on pollution during emissions testing. His lawyer, Daniel Nixon, said after the hearing that his client was "very remorseful".
Liang faces a maximum penalty of five years in prison and a fine up of to $250,000.
Liang was indicted in June, but the indictment was only made public on Friday.
Jeannine Ginivan, a Volkswagen spokeswoman, declined to comment on Liang's guilty plea.
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A Volkswagen engineer pleaded guility today to his role in the Volkswagen "dieselgate" scandal and admitted that he and other VW employees continued to lie to federal and California officials even after they had opened an investigation into the company's deceptive practices. Germany and South Korea are also conducting criminal probes of the company.
Liang was indicted in early June; later that month, Volkswagen agreed to pay "up to $10 billion to buy back cars and compensate USA vehicle owners in the largest civil settlement in automobile history", in addition to paying almost $5 billion in environmental reparations, as we reported.
A plea agreement with prosecutors stated that, even as VW billed its cars as "clean diesel", Mr Liang and other company employees "knew that these representations to USA customers were false and that VW's diesel vehicles were not clean".
Liang was one of the engineers in Wolfsburg, Germany, directly involved in developing the defeat device for the Volkswagen Jetta in 2006, according to the indictment.
According to the plea agreement, employees of VW and its USA subsidiary met with the Environmental Protection Agency and the California Air Resources Board to seek the certifications required to sell each model year of its vehicles to US customers.
Mr Liang was a key part of VW's efforts to quell regulators' concerns about the vehicles following a 2014 study that identified discrepancies between the cars' emissions in lab tests compared with their actual road performance. When the engineers realized they couldn't meet consumer expectations and United States air quality standards at the same time, they began looking into using illegal software (often known in the auto industry as a "defeat device"). Investigators uncovered internal company emails that show Liang and other VW engineers exchanged ideas about how to "effectively calibrate the defeat device" so that the cars would recognize when they were undergoing US emissions testing. In fact, the update was to allow the cheat system to more easily detect when the vehicle was being tested, using the angle of the steering wheel.
