The Justice Department has issued a subpoena under the Financial Institutions Reform, Recovery and Enforcement Act, or Firrea, to pursue possible wrongdoing at Volkswagen, these people said, according to The Wall Street Journal.
That is a novel use of the civil financial fraud law that the Obama administration deployed to extract record-setting multibillion-dollar settlements from big banks in the wake of the 2008 financial crisis. It suggests the car maker faces another potential source of penalties after admitting it used illegal software that allowed diesel-powered vehicles to pollute more on the road than during government emissions tests, according to the report.
Prosecutors also have used Firrea to probe alleged misdeeds in the auto loan industry, but the Volkswagen subpoena marks the first known instance of the government using a banking law to pursue potential wrongdoing that is not directly linked to financial misconduct.
The company already faces a multifront fight—including battling the Environmental Protection Agency, the Justice Department’s criminal division, state attorneys general and civil lawsuits from car buyers—over alleged fraud in marketing the fuel efficiency of some 580,000 of its vehicles in the U.S.
