Mr. Schmidt, in his email to superiors about the meeting, reported
that Mr. Ayala “was pleased that Volkswagen is addressing the problem and taking it seriously.” But, Mr. Schmidt wrote, Mr. Ayala had also expressed dissatisfaction with Volkswagen’s slow response until then.
In a statement, David Massey, a lawyer for Mr. Schmidt, said: “At its core, the government’s case against Mr. Schmidt is based
on a fundamental misunderstanding of what happened on two occasions when Mr. Schmidt spoke to regulators in August 2015.”
As word spread inside Volkswagen that the regulators knew about the illegal software, employees began trying to cover their tracks.
On Aug. 5, Mr. Schmidt, who the previous March had moved to a job in engine development in Wolfsburg,
and Mr. Johnson, who had replaced him as head of emissions compliance in the United States, asked to meet with Mr. Ayala of CARB after learning he was scheduled to speak at an industry conference in Traverse City, Mich.
But even according to Volkswagen’s version of events, Mr. Winterkorn was in all likelihood informed
that the underlying problem related to “software altered to influence emissions performance during testing.” According to Volkswagen, Mr. Winterkorn was not informed at the meeting that the software violated United States law.
Hours earlier, on the sidelines of an industry conference in Michigan, Mr. Schmidt had presented Mr. Ayala with
a binder full of detailed technical information which purported to offer a solution to the emissions problem.
