A federal court in Detroit today sentenced Volkswagen AG in connection with conspiracy to cheat U.S. emissions tests. During the sentencing hearing, the court accepted the parties’ plea agreement, which requires VW to pay a $2.8 billion penalty stemming from the company’s decade-long scheme to sell diesel vehicles containing software designed to cheat U.S. emissions tests.

U.S. District Judge Sean Cox of the Eastern District of Michigan accepted the plea agreement, resulting in VW’s conviction on three felony charges: (1) conspiracy to defraud the United States, engage in wire fraud, and violate the Clean Air Act; (2) obstruction of justice; and (3) importation of merchandise by means of false statements.

VW was convicted, first, of participating in a conspiracy to defraud the United States and its U.S. customers and to violate the Clean Air Act by lying and misleading the EPA and U.S. customers about whether certain VW, Audi and Porsche branded diesel vehicles complied with U.S. emissions standards. Moreover, the company used cheating software to circumvent the U.S. testing process, and concealed material facts about its cheating from U.S. regulators. Second, VW was convicted of obstruction of justice for destroying documents related to the scheme. Third, VW was convicted of importing these cars into the United States by means of false statements about the vehicles’ compliance with emissions limitations.

“The sentencing of Volkswagen marks a significant milestone in this historic case,” Acting U.S. Attorney Daniel Lemisch said in a statement. “Volkswagen has been punished for its scheme to defeat U.S. environmental standards and cheat U.S. consumers. This prosecution sends a strong message to Volkswagen and others that we take our environmental laws seriously and that federal prosecution awaits those who defraud the EPA.”

As part of the plea agreement, VW will pay a $2.8 billion criminal penalty to the United States and fully cooperate in the government’s ongoing investigation and prosecution of individuals responsible for these crimes.

Compliance monitor. The parties also announced that the government had selected Larry Thompson as an independent corporate compliance monitor who will oversee the company during its three-year term of probation. Thompson is a former Deputy U.S. Attorney General. His team includes experts in automotive regulatory compliance, as well as the corporate monitors for Deutsche Bank in the London Interbank Offered Rate (LIBOR) manipulation prosecution and Duke Energy in the coal ash environmental prosecution.

Along with the January 2017 plea agreement, the United States also announced separate civil resolutions of environmental, customs and financial claims, in which VW agreed to pay an additional $1.5 billion to settle EPA’s claim for civil penalties in connection with the importation and sale of these cars, as well as U.S. Customs and Border Protection claims for customs fraud. In addition, that agreement requires injunctive relief to prevent future violations. The agreements also resolved alleged violations of the Financial Institutions Reform, Recovery and Enforcement Act.