In August, VW engineer James Liang was sentenced to 40 months in prison for his role in helping the German carmaker cheat USA emissions tests.
Prosecutors say Schmidt, a German national, lied to US environmental authorities, lied to investigators and encouraged others at VW to destroy arguments. Judge Cox told Schmidt during the sentencing hearing that he "viewed the cover-up as an opportunity to shine and climb up the corporate ladder".
Along with the seven years in prison, Schmidt was ordered to pay a $400,000 fine. The government says he later misled US investigators and destroyed documents.
"I made bad decisions and for that I am sorry", he said.
"The defendant has a leadership role within VW", federal officials said. He's charged in a federal criminal complaint for his alleged role in the emissions scandal.
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Schmidt pleaded guilty to his part in the coverup, but argued that VW had "misused" him. Both the jail term and the fine were at the top end of sentencing guidelines.
Schmidt is one of eight people charged by USA authorities in the emissions scandal, which involved installing software in around 500,000 Volkswagen 2.0-liter diesel vehicles sold in the United States from 2009 through 2015 to make US authorities believe the vehicles met USA emissions standards.
Schmidt, a German citizen who lived in Detroit as an emissions compliance executive for VW, was arrested in Miami on vacation last January.
The software reduced harmful emissions of nitrogen oxide when the cars were being tested, but on the road, the emissions were well over limits to control pollution. As VW Group rolled out its massive "clean diesel" marketing campaign appealing to environmentally conscious auto buyers, those same cars were actually emitting nitrogen oxide (NOx) many times in excess of the legal limit.