Volkswagen AG paid the largest criminal fine in history, a $2.8 billion penalty imposed in 2017 after the automaker pleaded guilty to three federal felonies for rigging roughly 590,000 diesel vehicles to cheat U.S. emissions tests.1United States Department of Justice. Volkswagen AG Agrees to Plead Guilty and Pay $4.3 Billion in Criminal and Civil Penalties The ranking shifts depending on what you count. If the question is the single criminal fine, Volkswagen holds the record. If the question is the total criminal resolution, with forfeiture folded in, cryptocurrency exchange Binance took the top spot in 2023 at roughly $4.3 billion.
What Volkswagen Did to Earn the Record
Volkswagen installed software in its diesel cars that could detect when a vehicle was being tested for emissions. During the test, full pollution controls kicked in. During normal driving on the road, those controls switched off, and the cars emitted nitrogen oxides at levels far above the legal limit. When U.S. regulators began asking questions, Volkswagen executives lied and worked to obstruct the investigation.1United States Department of Justice. Volkswagen AG Agrees to Plead Guilty and Pay $4.3 Billion in Criminal and Civil Penalties
The $2.8 billion criminal fine sat alongside $1.5 billion in civil penalties, bringing Volkswagen’s total to $4.3 billion. Six VW executives and employees were indicted, and a court-appointed monitor was installed over the company’s operations. The combination of scale, deliberate deception, and obstruction is what pushed the fine past every previous record.
The Records That Came Before
For roughly eight years before Volkswagen, Pfizer held the record. In 2009, Pfizer and its subsidiary Pharmacia & Upjohn agreed to pay $2.3 billion to resolve criminal and civil charges tied to illegal drug marketing. The criminal portion came to $1.3 billion, including a $1.195 billion fine paid by the subsidiary and $105 million in forfeiture.2United States Department of Justice. Justice Department Announces Largest Health Care Fraud Settlement in Its History The Department of Justice described it as the largest health care fraud settlement in its history.
Pharmacia & Upjohn pleaded guilty to a felony for misbranding Bextra, an anti-inflammatory painkiller, with intent to defraud or mislead. The FDA had refused to approve Bextra for certain uses and dosages because of safety concerns. Pfizer promoted it for those uses anyway. The agency pulled Bextra off the market entirely in 2005.3Federal Bureau of Investigation. Pharmacia and Upjohn Company Inc Pleads Guilty to Fraudulent Marketing of Bextra Pfizer also illegally promoted Geodon, an antipsychotic; Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug. On top of the off-label marketing, the company paid kickbacks to doctors to encourage prescriptions. The improper prescriptions generated false claims against Medicare, Medicaid, and other government health programs, which produced the civil side of the $2.3 billion settlement.2United States Department of Justice. Justice Department Announces Largest Health Care Fraud Settlement in Its History
Prosecutors pointed to a particularly brazen fact when setting the penalty: at the same time Pfizer was negotiating a settlement for fraud committed by Warner-Lambert, a company it had acquired, Pfizer’s own operations were committing the same kinds of violations.2United States Department of Justice. Justice Department Announces Largest Health Care Fraud Settlement in Its History Individual accountability was thin. Only two former regional sales managers were prosecuted, one receiving a $75,000 fine and two years of probation, the other six months of home confinement and three years of probation. No senior executives faced criminal charges.
In 2013, BP Exploration and Production briefly held the record, paying $4 billion in total criminal fines and penalties for the 2010 Deepwater Horizon oil spill that killed eleven workers and caused the worst offshore oil disaster in U.S. history. Of that $4 billion, $1.256 billion was the criminal fine itself; the rest went to the National Fish and Wildlife Foundation and the National Academy of Sciences.4Federal Bureau of Investigation. BP Exploration and Production Inc Pleads Guilty, is Sentenced to Pay Record $4 Billion for Crimes Surrounding Deepwater Horizon Incident
Then came Binance in 2023. The cryptocurrency exchange pleaded guilty to violations of the Bank Secrecy Act and U.S. sanctions laws and agreed to a resolution exceeding $4.3 billion. The criminal fine component was roughly $1.8 billion, with another $2.5 billion in forfeiture. Binance’s CEO personally pleaded guilty and stepped down as part of the deal.5United States Department of Justice. Binance and CEO Plead Guilty to Federal Charges in $4B Resolution
That leaves the picture split by measurement. Volkswagen holds the record for the largest single criminal fine at $2.8 billion. Binance holds the record for the largest total criminal resolution at $4.3 billion. Pfizer remains the benchmark for pharmaceutical fraud enforcement even though its dollar figures have been passed.
How Fines Get This Large
Federal courts don’t set corporate fines by instinct. Chapter Eight of the U.S. Sentencing Guidelines Manual provides the framework, built around a culpability score that moves up or down with specific facts.6United States Sentencing Commission. Fines for Organizations The starting point is the severity of the offense: what the company did, how long it continued, how many people were harmed, and how much the company gained. Courts must also add to the fine any profit from the offense that hasn’t already been returned through restitution.7U.S. Sentencing Commission. Chapter Eight Fine Primer – Determining the Appropriate Fine Under the Organizational Guidelines
Two factors reliably push the culpability score down. A genuine compliance program in place before the offense is worth a three-point reduction. Self-reporting the offense, fully cooperating, and accepting responsibility is worth a five-point reduction. Prior misconduct and obstruction of justice during the investigation each push the score up.7U.S. Sentencing Commission. Chapter Eight Fine Primer – Determining the Appropriate Fine Under the Organizational Guidelines Volkswagen’s obstruction, and Pfizer’s repeat conduct while negotiating a prior settlement, are exactly the kind of aggravating facts that drive a fine toward the ceiling rather than the floor.
Ability to pay matters too. A court can reduce a fine below the guideline range if the company genuinely cannot afford it, but only to the extent needed to keep the company viable. If the company existed primarily to commit crimes, the court is supposed to set the fine high enough to strip it of all assets.7U.S. Sentencing Commission. Chapter Eight Fine Primer – Determining the Appropriate Fine Under the Organizational Guidelines
Where the Money Goes
Most federal criminal fines are deposited into the Crime Victims Fund, a Treasury account that supports victims of crime. The fund receives fines from federal criminal convictions, with narrow exceptions for penalties earmarked to specific purposes like endangered species protection. Funds collected through deferred prosecution or non-prosecution agreements also flow into the Crime Victims Fund rather than the general Treasury.8Office of the Law Revision Counsel. 34 US Code 20101 – Crime Victims Fund Civil components work differently. The civil side of the Pfizer settlement, for example, went to reimburse Medicare, Medicaid, and other government health programs that had paid for improperly marketed prescriptions.