By Christopher M. Matthews And Mike Spector 

Federal prosecutors are closing in on criminal charges against General Motors Co. over a faulty ignition switch linked to more than 100 deaths, but they are still weighing whether to charge individual employees, according to people familiar with the matter.

The Manhattan U.S. attorney's office has determined GM likely broke the law by making misstatements about the ignition-switch glitch in older Chevrolet Cobalts and other cars for more than a decade and will likely extract a fine exceeding $1 billion from the company, the people said. GM will either plead guilty or enter a so-called deferred-prosecution agreement, they said.

A deferred-prosecution agreement would mean the company would face charges that would be suspended and ultimately dismissed if it abides with prosecutors' terms.

Prosecutors' investigation is at an advanced stage, though the criminal case may yet fall apart, some of the people said.

Prosecutors believe that GM is likely to strongly argue against a guilty plea, one of the people familiar with the matter said. If the case moves forward, it would be the second brought by U.S. prosecutors in an unprecedented crackdown on auto makers for safety problems.

"We are cooperating fully with all requests, but we are unable to comment on the status of the investigation, including timing," a GM representative said Saturday.

The Justice Department previously brought criminal charges against Toyota Motor Corp. of Japan. In that case, the company entered into a deferred-prosecution agreement and was fined over sudden-acceleration problems, which were implicated in a number of deaths. Toyota acknowledged wrongdoing in its settlement.

The Justice Department is also investigating another Japanese company, parts supplier Takata Corp., over rupture-prone air bags linked to at least six deaths that have spurred a recall of nearly 34 million vehicles, the largest such automotive action in U.S. history. Takata has acknowledged defects in its air-bag inflaters and has endorsed the recalls of millions of vehicles with the equipment at 11 auto makers. The case was initially handled by the Manhattan U.S. attorney's office but is now being directed by the Justice Department's fraud section and the Detroit U.S. attorney's office, according to some of the people.

The New York Times previously reported that prosecutors had determined criminal wrongdoing in the GM case.

Prosecutors have previously acknowledged privately that GM will pay a large fine. But the thornier question is whether individual employees would be held accountable.

GM's penalty could exceed the unprecedented $1.2 billion levied last year on Toyota for its sudden-acceleration problems, according to some of the people familiar with the matter. No current or former employees were charged in the Toyota case.

Preet Bharara, who heads the Manhattan U.S. attorney's office, has made cases like GM and Toyota a priority.

Mr. Bharara has said that, from his viewpoint, the auto industry, which had never previously faced federal criminal cases related to product defects, has long needed the threat of criminal liability to spur overdue changes.

"The first line of defense is self-policing within the company. The second is regulators," Mr. Bharara said in a recent interview with The Wall Street Journal. "When all those things have failed, prosecutors come along with the blunt hammer. That does get some attention in the board room."

Prosecutors have been investigating specific GM employees for months, including scrutinizing whether employees inside and outside GM's legal department concealed evidence from regulators about the faulty ignition switch, potentially delaying a recall of vehicles with the fatal problem, according to some of the people familiar with the matter.

GM in early 2014 recalled roughly 2.6 million vehicles equipped with the defective switch, which can slip out of the run position and cut power to safety systems including air bags, power steering and power brakes. GM then set up a victims-compensation fund that has tied more than 100 deaths to the safety problem.

GM paid a record $35 million civil fine last year and signed a consent order acknowledging the company failed to notify U.S. auto-safety regulators in a timely manner of the ignition-switch safety defect as required under federal law.

But the Justice Department investigation is unlikely to result in charges against anyone in the legal department and is instead focused on a handful of engineers, the people familiar with the matter said.

Prosecutors have pored over a 315-page report commissioned by GM and written by former U.S. Attorney Anton Valukas , which was made public last June. GM scored points with prosecutors for commissioning the report and for the company's overall cooperation, according to some of the people familiar with the matter.

The report was especially critical of Raymond DeGiorgio and said the engineer approved the initial ignition-switch design in 2001 even though he knew it failed to meet GM's standards. After problems surfaced, Mr. DeGiorgio tweaked the design but told no one about the change and didn't assign a new part number to the switch, which might have alerted GM to the problems, the report concluded.

Mr. DeGiorgio couldn't be reached for comment on Saturday.

GM Chief Executive Mary Barra dismissed 15 employees, including Mr. DeGiorgio, following the release of the report and overhauled the company's approach to handling safety issues. She bemoaned a "pattern of incompetence and neglect" at GM outlined in Mr. Valukas's report.

Mr. Valukas said GM officials were "misled" by Mr. DeGiorgio, whose name was cited more than 200 times in the report and its footnotes.

Prosecutors have met with Mr. DeGiorgio and other GM employees over the past year, according to some of the people familiar with the matter.

It could be difficult to prove that any of Mr. DeGiorgio's alleged actions were done with criminal intent, the people said.

The Justice Department has been subject to criticism recently for not charging individuals in connection with corporate settlements.

The issue arose in the Toyota case last year, when U.S. District Judge William H. Pauley approved a settlement between the Justice Department and the auto maker but scolded prosecutors for not charging individual employees. "Corporate fraud can kill," he said during a hearing last March.

Mr. Bharara has said he is sensitive to criticism of not prosecuting individuals, an issue that has also surfaced in the Justice Department's handling of financial-crisis-related cases, but says corporate settlements are important.

"Prosecuting individuals is our bread and butter, but it's not just a question of punishment but of deterrence," Mr. Bharara said in the interview with the Journal. "The issue of how you affect individuals' behavior and how you affect a company's policies and procedures are not walled off from each other."

Jeff Bennett and John D. Stoll contributed to this article.

Write to Christopher M. Matthews at christopher.matthews@wsj.com and Mike Spector at mike.spector@wsj.com

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