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Toyota to pay $1.2b to settle criminal probe

Utah police in 2010 suspected problems with a Toyota Camry’s accelerator or floor mat caused a crash that killed two.

Utah Highway Patrol via associated Press/File 2010

Utah police in 2010 suspected problems with a Toyota Camry’s accelerator or floor mat caused a crash that killed two.

WASHINGTON — Toyota, making an unusual admission of wrongdoing involving defects that caused vehicles to accelerate unexpectedly and resulted in deaths, agreed to pay $1.2 billion to settle an investigation by the US government.

Attorney General Eric Holder said Wednesday that the penalty was the largest of its kind imposed on an auto company. The four-year criminal investigation focused on whether Toyota promptly reported the problems related to unintended acceleration.

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The company admitted to misleading consumers and regulators by assuring them that it had adequately addressed an acceleration problem stemming from ill-fitting floor mats — which attracted widespread publicity in 2009 following a car crash in San Diego that killed a family of four — through a limited safety recall of certain models.

Toyota knew at the time that it had not recalled other models susceptible to the same problem and also took steps to conceal from regulators a separate acceleration problem related to a faulty pedal, according to the Justice Department.

‘‘In other words, Toyota confronted a public safety emergency as it if were a simple public relations problem,’’ Holder said at a news conference.

The settlement could provide a template for the authorities pursuing a similar case against General Motors linked to a defect that caused GM vehicles to shut down unexpectedly.

Holder seemed to signal as much Wednesday, saying that “other car companies should not repeat Toyota’s mistake.”

The US accord could provide a template for authorities pursuing a similar case against General Motors.

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Toyota also agreed to cooperate with an independent monitor who will oversee Toyota’s public statements and regulatory reporting about safety issues. The deal is subject to judicial review and includes a so-called deferred prosecution agreement, in which federal prosecutors would file criminal charges but dismiss them after three years if the company resolved its problems.

It is rare for automakers to be held criminally liable for defects, and it is rarer still for such accusations to lead to a significant fine.

“The entire auto industry should take notice,” said Preet Bharara, the US attorney in Manhattan who led the investigation of Toyota.

At one point during the news conference, which was also attended by the transportation secretary, Anthony R. Foxx, Bharara slipped up and said “General Motors” instead of “Toyota,” prompting awkward smirks from government officials including Holder, who had just taken pains to avoid saying anything about whether GM was even under investigation.

Toyota initially denied publicly and in conversations with federal regulators that it knew about the defect, but an FBI inquiry found that internal company records showed the automaker knew the problem was deepening, two people briefed on the matter said.

According to a statement of facts filed in the case, an exasperated Toyota employee was said to have remarked at one point, ‘‘Idiots! Someone will go to jail if lies are repeatedly told. I can’t support this.’’

Toyota said in a statement that in the four years since the recalls it had ‘‘made fundamental changes to become a more responsive and customer-focused organization, and we are committed to continued improvements.’’

The company’s finances have recovered from the recalls, and the recession and the 2011 tsunami in Japan. But its once-sterling reputation for quality and reliability has been tarnished, and its market share is still below where it was in 2009.

No Toyota executives were charged under the deal. Bharara said he expected the agreement to be a ‘‘final resolution.’’

Starting in 2009, Toyota issued massive recalls, mostly in the United States, totaling more than 10 million vehicles for various problems including faulty brakes, sticky gas pedals, and ill-fitting floor mats. From 2010 through 2012, Toyota paid fines totaling more than $66 million for delays in reporting safety problems. Toyota agreed last year to pay more than $1 billion to owners of its cars who claimed to have suffered economic losses because of the recalls.

The company still faces wrongful death and injury lawsuits that have been consolidated in California state and federal courts. In December, Toyota filed court papers after saying that it’s in settlement talks on nearly 400 US lawsuits, but some other cases aren’t included in the talks.

The negotiations began less than two months after an Oklahoma jury awarded $3 million in damages to the injured driver of a 2005 Camry and to the family of a passenger who was killed.

The ruling was significant because Toyota had won all previous unintended acceleration cases that went to trial. It was also the first case where attorneys for plaintiffs argued that the car’s electronics — in this case the software connected to a midsize Camry’s electronic throttle-control system — were the cause of the unintended acceleration.

At the time, legal specialists said the Oklahoma verdict might cause Toyota to consider a broad settlement of the remaining cases.

Toyota has blamed drivers, stuck accelerators, or floor mats that trapped the gas pedal for the acceleration claims that led to the big recalls of Camrys and other vehicles. The company has repeatedly denied the electronics are flawed.

While significant, the latest penalty isn’t a severe hit to Toyota’s finances. In its last fiscal quarter alone, Toyota posted a $5.2 billion profit, crediting strong global sales.

Toyota’s US market share, however, has fallen more than 4 percentage points since unintended acceleration came to the forefront in August of 2009, when a California Highway Patrol officer and three others were killed in a fiery crash.

Material from The New York Times was used in this report.
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