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Toyota case shows it’s hard to prosecute execs

Rules of evidence, witnesses abroad made jail unlikely

Attorney General Eric Holder (right) and the US attorney in New York, Preet Bharara, discussed the $1.2 billion settlement with Toyota at a news conference last week.

Susan Walsh /Associated Press

Attorney General Eric Holder (right) and the US attorney in New York, Preet Bharara, discussed the $1.2 billion settlement with Toyota at a news conference last week.

WASHINGTON — Efforts to conceal the extent of dangerous car defects at Toyota Motor Corp. were so pervasive, prosecutors say, that an exasperated employee at one point warned that ‘‘someone will go to jail if lies are repeatedly told.’’

Yet no one has gone to jail, nor is anyone likely to.

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Last week, the Justice Department socked the car company with a $1.2 billion penalty but brought no criminal charges against individual executives, an unsatisfying resolution for consumer activists who say prison is the best deterrence for corporate malfeasance.

Prosecutors say they had little choice, in part because of constraints with evidence and the challenge of gathering testimony and information from witnesses abroad.

The same internal memos and public statements that buttressed the case against the corporation might well have been inadmissible as evidence against individuals. And it can be hard to prove the person whose name is on a damning document was responsible for the misstatements or knew that they were wrong, experts say.

While the case against the company may be overwhelming, personal responsibility for misstatements ‘‘is more difficult to prove beyond a reasonable doubt,’’ said Stephen Saltzburg, a law professor at George Washington University.

Preet Bharara, US attorney for the Southern District of New York, whose office brought the case, said last week that while he had not foreclosed the possibility of criminal charges against individuals, he expected the settlement to be the end of the matter.

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When lawbreakers live outside the country, ‘‘there are problems of evidence and problems of proof,’’ Bharara said when asked about the prospect of prosecuting individuals. Evidence that can be brought into play against a corporation, he said, might not be admissible against specific people.

Toyota, which acknowledged it hid information about defects, said 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 penalty is the largest of its kind ever brought against an auto company, according to the Justice Department. The department also filed a wire fraud charge against Toyota that the government says it will dismiss in three years if the company complies with terms of the settlement. Even so, some consumer advocates fear a monetary penalty alone generally doesn’t do enough.

‘‘While $1.2 billion is an enormous number, it is going to be very easily absorbed by the company,’’ said Jack Gillis, public affairs director for the Consumer Federation of America. ‘‘So shouldn’t there have been some personal culpability among the decision makers?’’

Court documents accuse Toyota of intentionally withholding information about problems that could make some of its cars accelerate out of control. One such problem, involving ill-fitting floor mats, attracted negative attention for the company following a 2009 car crash in San Diego that killed a family of four.

Prosecutors say Toyota made public statements that were misleading or false and key information about the extent of the problems was never disclosed. For example, they point to an inaccurate timeline the company provided to Congress on when it learned about a problem with sticky gas pedals that could cause unwanted acceleration. They also cite misleading disclosures to regulators and a 2009 online statement assuring the public that the ‘‘root cause’’ of one of the problems had been addressed.

When engineers found that gas pedals could stick, they told their parts supplier to start making a redesigned version and to scrap any pedals with the old design. But management canceled the fix and instructed the engineers not to tell the supplier in writing so there would be no paper trail, prosecutors said.

Under federal rules of evidence, prosecutors would have had a better chance of introducing those statements as evidence against the corporation than against an individual.

‘‘They would have to pinpoint some individual who wrote those statements knowing they were false,’’ said Paul Rothstein, a Georgetown University law professor. ‘‘That would be hard to do, even if they could pinpoint who actually composed the statement.”

General Motors Co. is facing a separate federal criminal probe in New York over delays in recalling small cars with a deadly ignition switch problem. It’s unclear whether any individuals are being investigated.

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