Volkswagen’s legal headaches from its “Dieselgate” scandal intensified as the U.S. Securities and Exchange Commission accused the automaker and its former CEO of defrauding U.S. investors by failing to disclose that it was cheating on vehicle emissions tests.

In a civil complaint filed on Thursday, the SEC said VW raised more than $13 billion dollars from U.S. investors between 2014 and 2015 as part of an illegal scheme to sell “clean diesel” cars that actually exceeded legal emissions limits.

CEO Martin Winterkorn and other VW executives, the SEC alleged, knew as early as November 2007 that the company was installing illegal software known as a “defeat device” in vehicles to conceal the emissions problem but for years “lied and made misleading omissions to conceal the existence” of the software.

As a result of the scheme, U.S. investors paid artificially inflated prices for more than $8 billion of VW bonds and $4.9 billion of asset-backed securities, the suit says.

“Issuers availing themselves of American capital markets must provide investors with accurate and complete information,” Stephanie Avakian, co-director of the SEC’s division of enforcement said in a news release. “As we allege, Volkswagen hid its decade-long emissions scheme while it was selling billions of dollars of its bonds to investors at inflated prices.”

According to The New York Times, the suit not only exposes VW to substantial new fines in the U.S. but is also “likely to strengthen legal claims filed by German and American investors who say the carmaker failed in its legal obligation to inform them of the risks it was taking.”

“The investors’ suits are a significant threat to Volkswagen, which is now spending heavily on developing electric cars as it tries to move past the scandal,” the Times added.

VW has already agreed to pay more than $25 billion in the U.S. to settle claims from vehicle owners, environmental regulators, states and dealers. It also faces investor lawsuits in Germany.

The SEC said the bond and ABS sales were based on a lie. “VW’s ‘clean diesel’ engines were a fraud,” it alleged. “They did not exist.”

Photo: Getty Images

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