Federal prosecutors have evidence that Volkswagen committed crimes by cheating on U.S. emissions tests, according to a report in the Wall Street Journal.

The paper reported U.S. attorneys are negotiating a settlement with the German automaker before the end of the year. The crimes are related to VW installing software that would allow its "clean diesel" vehicles to skirt federal emissions tests.

About 585,000 vehicles in the United States contained the software.

Specific criminal charges have not been decided upon, and prosecutors are still deciding whether to try to convict VW or enter into a deferment program. The deferment program would see the charges dismissed as long as VW abided by the terms of the settlement, according to the report.

VW already agreed to a settlement with the Environmental Protection Agency and regulators in California that would see the automaker pay more than $14 billion in penalties.

The clean diesel vehicles came installed with "defeat devices," or software that could tell when the vehicles were undergoing emissions testing. When they were being tested, the vehicles would switch into a cleaner mode that would allow them to pass the tests. But when under normal driving conditions, the vehicles would spew up to 40 times the legal amount of nitrogen oxide into the atmosphere.

The company has admitted to installing the software and will pay up to $14.7 billion in a settlement with the government for the 2.0-liter vehicles.

A lawsuit filed last month by New York Attorney General Eric Schneiderman charged that executives at the highest levels of the company knew about the scheme. After government regulators began to get wise to the scam about a year ago, the company destroyed documents to try to cover it up, the lawsuit states.

VW has proposed two options for customers in a proposed settlement with the EPA: They can sell their car back to the company or terminate their lease early with no penalty, or they can keep their vehicle and get a free emissions modification. The emissions modification would have to be approved by the EPA and the California Air Resources Board.

The federal judge overseeing the case against the German automaker preliminarily approved the proposal. Full approval is expected to come in the fall.