AG & FBI Open Criminal Probe into GM Ignition Switch Recall

Breaking: The U.S. Attorney’s office in New York has opened a criminal investigation into General Motors to determine if there was criminal wrongdoing on GM’s part in connection with the ignition switch recall. According to a CBS News report, the FBI has also joined New York prosecutors in the investigation. At least 13 people have died so far in car accident linked to the ignition-switch defect.

GM Knew of the Defect

GM has admitted in filings to the U.S. National Highway Traffic Safety Administration (NHTSA) that it knew about the defect for about a decade, but never issued a recall until last month when 1.6 million cars including Chevy Cobalts, Pontiac G5s, Saturn Ions and Pontiac Soltices. GM announced this week that it is offering free loaner cars and $500 toward a new GM vehicle to more than 1 million owners of the compact cars that are being recalled. Officials now believe more deaths may be connected to this auto defect.

The automaker recently settled with the family of 29-year-old Brooke Melton, a nurse who was killed in a crash. When Melton’s Chevy Cobalt crashed in Georgia four years ago, the engine was not running and the switch was in accessory position. Five years before Melton died, GM issued a service bulletin to its dealers about the faulty ignition switches. When Melton took her car to the dealership complaining that her engine shut off while driving, technicians cleaned the car’s fuel injection and returned it to her. She died in the crash the following day.

Will GM Be Held Criminally Liable?

While criminal prosecution could help bring some sense of justice to victims and their families, there is a strong possibility that GM won’t face legal liability for most of the 13 deaths. That is because in 2009, GM received a shield from such lawsuits as part of the government bailout. Claims from suits prior to the bankruptcy go to the Motors Liquidation Co., a shell corporation holding only closed GM plants and other debts. In most of the 2,500-plus auto defect cases GM faced in 2009, plaintiffs have received only pennies on the dollar.

There is no question that it is absolutely unfair. GM’s bankruptcy was not one where they went out of business. GM continues to exist essentially as the same company, selling the same brands of vehicles. While GM had no problem taking taxpayers’ money, they decline to accept responsibility to the public. It’s the public – the consumers – who paid the ultimate price for GM’s negligence, their failure to warn consumers about these deadly auto defects. While GM officials have said they hold themselves accountable for the problems related to the recall, they have said nothing about whether they will waive this liability shield and allow victims and their families to pursue their legal rights. If GM wants to put consumers first, as they say in all their news releases, here is their chance.