Oliver Schmidt, who oversaw the automaker's regulatory compliance office, faces fraud charges.
The settlement would be the largest ever automotive buyback offer in U.S. history and most expensive auto industry scandal.
The cars used sophisticated software to evade U.S. emission rules.
"This case has ingredients I've spent my life working on."
The government has vowed to punish executives for corporate wrongdoing. Will it follow through?
The Justice Department and the Environmental Protection Agency on Monday filed a civil complaint against the German automaker in U.S. District Court in Detroit.
"Cure the air, not the cars."
"Our emissions testing will in future be verified by internal and external third parties."
VW, a top-selling automaker known for its German engineering, clean-diesel technology and strong market share since 1937, cheated emissions testing using software in 11 million vehicles with small diesel engines worldwide. By recognizing when the vehicles were undergoing emissions testing, performance was modified by the software.
The Volkswagen-owned manufacturer will invest $1 billion and create more than 1,000 new jobs in Germany.