(Bloomberg) -- A veteran Volkswagen AG engineer pleadedguilty to conspiring to defraud U.S. regulators and customers, thefirst criminal charge in the Justice Department’s year-long investigationinto the company’s rigging of federal air-pollution tests.

The engineer, James Liang, who entered his plea in Detroitfederal court on Friday, is cooperating with the investigation,increasing pressure on higher-ranking officials of the company. Hislawyer said that Liang was “one of many at Volkswagen” involved inthe scheme.

Although the company has already agreed to settlements that may total $16.5billion to get 482,000 emissions-cheating diesel cars off U.S.roads., the Justice Department is continuing its criminal inquiryinto the company’s manipulation of emissions systems.

“Almost from the beginning of VW’s process to design its new‘clean diesel’ vehicles, Liang and his fellow co-conspiratorsdesigned these VW diesel vehicles not to meet U.S. emissionsstandards, but to cheat the testing process,” prosecutors contendin an indictment unsealed on Friday.

10-year conspiracy

The government described a 10-year conspiracy begun by Volkswagenemployees as soon as they realized they couldn’t meet new U.S.emissions standards. As the emissions-control devices began to age,Liang and others doubled down and programmed the devices to rundirty for longer, hoping to avoid warranty claims. Later, whenconfronted by regulators, they tried to cover up their actions.

The conspiracy described by the government will make itdifficult for the company to dismiss the scheme as only the work ofrogue engineers and will complicate its efforts to revive itsscandal-tainted business.

VW’s shares fell as much as 1 percent on Friday and closed down0.83 percent at 124.85 euros in German trading.

Liang, 62 years old, spent 25 years with Volkswagen inWolfsburg, Germany, before moving to the U.S. in 2008, according toan indictment unsealed on Friday. As the head of the DieselCompetence unit in the U.S., he reported to Germany, prosecutorssaid.

“I know VW did not disclose the defeat device to U.S. regulatorsin order to sell the cars in the U.S.,” Liang told the judge incourt on Friday. “That’s what makes me guilty.”

‘Clean diesel’

In 2006, while still in Wolfsburg, Liang and his co-conspiratorsbegan to design a “clean diesel” engine for sale in the U.S.— a project known within VW as “US ’07.” From the beginning,prosecutors said, Liang and his co-conspirators realized theycouldn’t design a diesel engine that could both meet U.S. emissionsstandards and also satisfy customers.

So, prosecutors wrote, they “designed, created and implemented asoftware function (the “defeat device”) to cheat the standard U.S.emissions test.” The defeat device software — which theycalled “acoustic function,” “cycle beating software” or“emissions-tight mode” — was designed to recognize when thecar was undergoing U.S. emissions testing and switch to alower-emissions setting.

Related: The only winners in Volkswagen's diesel mess aredrivers

Those engines went on sale in beginning in the 2009 model year.In September 2013, Liang exchanged an e-mail with a VW colleagueabout preparing one of the vehicles for a test. “If this goesthrough without problems, the function is probably trulywatertight! ;.) ” the employee wrote to Liang, according to theindictment.

At one point, VW’s warranty costs rose as the emissions systems’parts and components failed. Some of Liang’s colleagues believedthat was because the cars would sometimes operate on the road inthe low-emission mode, the government said in Liang’s pleaagreement.

Liang and his co-conspirators updated the software in 2014. VWfraudulently told customers that the update was intended to improvethe cars, the government said, when in fact it was intended to keepthe cars running in dirtier “defeat” mode on the road.

Urging ‘creativity’

By 2014, emails between Liang and other employees were asking howto respond to regulators in California concerned about largediscrepancies between the cars’ emissions in the lab and on theroad. A VW employee sent Liang and other workers an e-mail in 2015for suggestions. In German, that employee wrote: “The key word‘creativity’ would be helpful here.”

Later, the employees received a group update saying thatCalifornia was waiting for answers. “We still have no goodexplanations!!!!!” the employee wrote.

Related: VW's secret language in cheating scandal bogs downprobe

Liang admitted on Friday to a charge of conspiracy to commitfraud against U.S. regulators and customers and to violate theClean Air Act. He faces a maximum penalty of five years inprison and a fine of up to $250,000, although cooperatorsoften receive leniency at sentencing. He is to be sentenced on Jan.11.

Liang “is coming here to Detroit today to accept responsibilityfor his actions,” said his lawyer, Daniel Nixon. “He isremorseful.”

Other probes

The information Liang is providing to prosecutors could speed theinvestigation of the company. Settlement talks in the criminalmatter could be resolved by the end of the year, according to twopeople familiar with the probe. Germany and South Korea areconducting separate criminal probes of the company.

Jeannine Ginivan, a Volkswagen spokeswoman, declined to commenton Liang’s guilty plea.

The Justice Department a year ago put in place a policyrequiring that all corporate cases include a plan to chargeindividuals — a policy that came amid criticism that companyofficials weren’t being held accountable even as the businessespaid billions of dollars in fines. The department has saidcompanies that want credit for cooperating with investigators mustname individuals whom they consider responsible for anymisconduct.

“Today’s criminal charges are just the beginning in the VWcase,” said David Uhlmann, a law professor at the University ofMichigan in Ann Arbor and a former head of environmentalprosecutions at the Justice Department. He said he expects morecharges against individuals. “What is less clear is whether thereare more individuals in the United States who can be charged orwhether everyone else is a German national who would need to beextradited to be brought to justice.”

Auto executives rarely prosecuted

Top-ranking auto executives have rarely been prosecuted in theircompanies’ scandals. In cases brought against General Motors Co.for ignition problems and Toyota Motor Corp. for uncontrolledacceleration, no high-ranking executives were accused of wrongdoingin the U.S.

VW still faces lawsuits by at least five states and by investorsand dealerships in the U.S. There are parallel lawsuits, includingconsumer complaints, in Germany, all of which could raise thescandal’s price tag for the automaker.

Future expenses could include hundreds of millions of dollars infees for the lawyers who secured the multibillion-dollar deal forcar owners.

Related: VW fooled your DMV too, prompting calls for tougherair tests

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