By Aruna Viswanatha
WASHINGTON, March 25 (Reuters) - U.S. prosecutors are considering using the legal theory behind a $1.2 billion penalty imposed on Toyota to go after misconduct in industries ranging from auto and airplane makers to mining, a Justice Department official told Reuters.
The charges of wire fraud against Toyota for concealing safety problems marked the first criminal case of its kind against an auto company. The announcement last week of the settlement between the Department of Justice and Toyota immediately prompted speculation about its ramifications for General Motors, which is under investigation over its handling of a problem with ignition switches.
Prosecutors have generally used a narrower approach in previous criminal cases against companies for misleading the public over safety issues. Pharmaceutical firms, for example, have been prosecuted under a law that makes it a crime to market drugs for uses other than those that have been approved as safe by the FDA.
Auto companies, too, are subject to a specific law that makes it a crime for them to mislead regulators about safety defects.
Rather than prosecute Toyota under that law, the TREAD Act, the Justice Department relied on a broad theory arguing that misleading statements about major safety issues constitute wire fraud.
That theory could be applied across industries, including against companies that build planes or trains, or potentially the mining and oil sectors, the DOJ official and legal experts said.
"A case of this size is designed to set an example to entire industries," said Brandon Garrett, a University of Virginia Law School professor and expert on corporate crime.
"This isn't a cautious foray into criminal investigations and prosecutions in the auto area," he said, "This case is designed to send a big message."
The framework gives prosecutors the ability to go after industries that haven't been subject to much criminal prosecution in the past.
Criminal cases involving corporate malfeasance are often hard to prove against specific individuals, so it is unclear whether the Justice Department's new framework could also target executives responsible for the conduct. No Toyota executives were charged over their role in the misconduct.
It is unclear if the Justice Department has active investigations into such conduct outside of the auto industry. The Justice official declined to comment on whether there were any such probes.
PROVING CRIMINAL INTENT
The government is investigating General Motors' handling of a defect in some cars that can lead the ignition to shift suddenly from the "run" position to "accessory," causing the steering, brakes and airbag systems to lose power. GM has said it received reports of 12 deaths and 34 crashes in cars with the defect.