NEW YORK — Eric T. Schneiderman, New York’s crusading attorney general, is back in the spotlight for aggressively targeting a company that federal officials had already prosecuted.
Last month, the Justice Department announced a massive, $14.7 billion settlement with German carmaker Volkswagen for equipping millions of diesel vehicles with software designed to cheat emissions tests.
On Tuesday, Schneiderman announced the state is filing one of three lawsuits against the car company to recoup the cost of the environmental harm caused by the “defeat devices.”
In a nearly 90-page lawsuit, the state argues that Volkswagen’s conduct was more deliberate and prolonged than previously understood. Texas and California have already filed similar suits, but Schneiderman’s office says it is taking a slightly different approach and offering more details about the company’s conduct that could give its case more heft. It is also making the first attempt to directly connect Volkswagen upper management to the deception.
“The defeat devices were part of a willful and systemic scheme involving dozens of employees, executives and officers up to the highest levels of the company, including former CEO Martin Winterkorn,” Schneiderman said during a news conference Tuesday. “It was well understood within the top ranks of the company that defeat devices pumped illegally high levels of pollutants into the air.”
During five years as New York’s chief prosecutor, Schneiderman has often emerged as an agitator, a label he appears to relish. During his first few months in office, he was lauded by consumer advocates for putting the brakes on a huge Justice Department settlement with the country’s large banks. The terms were not tough enough, Schneiderman argued. The New York Democrat is also investigating whether ExxonMobil misled the public and investors about the risks of climate change, a move sought by environmentalists but that has earned him ire from some Republicans in Congress.
Then there is the matter of Trump University. Schneiderman sued the now-defunct university for fraud in 2013, alleging it took advantage of thousands of students. That earned Schneiderman the label of “sleazebag” from presumptive Republican presidential nominee Donald Trump. Not that Schneiderman seems to mind.
Trump’s attacks, Schneiderman said in an interview, are “much more extreme, much less constrained by any legal, factual or moral considerations. When we sued him in 2013, nobody knew he was going to run for president. It was a fraud case, it is something we do.”
Schneiderman often says he is compelled to pursue some cases, such as the ExxonMobil lawsuit, by inaction in Washington. But there is also this: his desire to test boundaries. “I like trying things that no one has ever tried before,” he said.
Of course, Schneiderman has a long way to go to match the star power of his predecessor, Andrew Cuomo, who is now the state’s governor, or the notoriety of Eliot Spitzer, who turned the office into a bully pulpit for railing against Wall Street before resigning in a prostitution scandal.
He is also occasionally scolded for mixing his job with politics, including by the New York Post, which once called him an “ambitious, liberal New York pol.”
And some public advocates have been disappointed Schneiderman, like the Justice Department, has not been able to hold any high-level Wall Street executives responsible for the financial crisis. Under his leadership, New York has collected more than $5 billion from large banks for financial crisis-era misdeeds. But no bank officials have gone to prison or been personally held liable.
That may be, partly, by design.
“I often say to the lawyers here that catching bad guys is good, but changing systems so there are no more bad guys to catch is better,” Schneiderman said.
Far from the do-gooder image he has cultivated as attorney general, Schneiderman started by representing many of the same Wall Street figures he now prosecutes as a partner at a large New York law firm. Eventually, he turned to public interest law and spent several years in the New York Senate before setting his sights on the attorney general’s office in 2010.
He was almost immediately vaulted into the national spotlight after clashing with the Obama administration over settlements being reached with some of the big banks, including Bank of America, Citigroup, JPMorgan Chase and Wells Fargo. The banks were accused of dubious foreclosure practices that had harmed thousands of homeowners. But the settlements were not tough enough and did not hold any individuals responsible, Schneiderman argued.
He soon came under intense pressure from the Obama administration to drop his opposition to the wide-ranging 50-state settlement. Another member of the task force negotiating the deal, Iowa Attorney General Tom Miller, said at the time that Schneiderman’s approach “simply doesn’t make sense, is unprecedented and is unacceptable.”
Ultimately, Schneiderman signed off on the settlement after the banks agreed to pay $25 billion, becoming the largest industry settlement since an agreement with tobacco companies in 1998.
It became apparent “we were going to be able to get the largest penalties that had ever been enacted in the history of the country,” Schneiderman said. “But it also became apparent that it would be very difficult to get the individual liability I was hoping for.”
Despite clashing with the Obama administration on the deal, the president picked Schneiderman to co-chair a task force looking into the sale of mortgage-backed securities during the financial crisis. It was the administration’s big push to answer complaints that not enough had been done to hold banks and their executives accountable. (Schneiderman was seated one row behind first lady Michelle Obama during the 2012 State of the Union when the president announced the formation of the working group.)
So far, the panel has secured settlement agreements with the country’s five largest banks, most recently Goldman Sachs.
Now, Schneiderman is focusing on a new target. Volkswagen has been widely pilloried after admitting that 11 million of its vehicles worldwide included software that allowed the carmaker to cheat on emissions tests.
The lawsuits — filed by Schneiderman, Massachusetts Attorney General Maura Healey and Maryland Attorney General Brian E. Frosh — argue that the coverup was orchestrated and approved at the highest levels of the company. Pointing to internal Volkswagen documents and emails, the lawsuit argues that the fraud lasted more than a decade and included dozens of engineers.
“These suits should serve as a siren in every corporate board room, that if any company engages in this type of calculated and systematic illegality, we will bring the full force of the law — and seek the stiffest possible sanctions — to protect our citizens,” Schneiderman said.
Volkswagen said that the allegations included in the lawsuit are not new and that it is still cooperating with federal officials. “It is regrettable that some states have decided to sue for environmental claims now, notwithstanding their prior support of this ongoing federal-state collaborative process,” the company said.