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GM may be facing criminal charges for misleading consumers

Readers have probably all heard about the trouble General Motors Co. is currently going through in connection with product defect issues, specifically ignition switch failures in some of its models. The defect has been connected to over 100 fatalities. While the manufacturer has faces litigation for product liability and economic loss, the company has not faced any criminal charges over the debacle. That may soon change.

At present, prosecutors out in New York are considering whether the company can be charged with wire fraud in connection with the ignition switch fiasco. Fraud charges are being considered because the company may have made misleading statements and hid information concerning the defect. 

The use of mail and wire fraud charges in product liability cases like the GM case is a rather new occurrence. In fact, it was unheard of until last year when Toyota Motor Corp. faced wire fraud charges in connection with a defect that caused unintended acceleration in some of its vehicles. In that case, Toyota ended up reaching a $1.2 million settlement with the Justice Department over allegations that it misled consumers concerning the defect in an attempt to avoid costs by avoiding a full safety recall.

It isn’t exactly clear yet what angle prosecutors would take in pursuing fraud charges against GM, but given the flexibility of mail and wire fraud charges, there is a good possibility such charges are forthcoming.

In our next post, we’ll take a closer look a mail and wire fraud charges, and why it is important for defendants to work with an experienced attorney when facing them.

Sources:

Wall Street Journal, “Prosecutors Broadly Use Mail-Fraud, Wire-Fraud Statutes,” Christopher M. Matthews, June 9, 2015.

CNN, “Toyota to pay $1.2 billion in settlement with U.S. over recalls,” Evan Perez and Shimon Prokupecz, Mar. 19, 2015. 

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