(April 6, 2010) Toyota “knowingly hid a dangerous defect” that caused its vehicles to accelerate unexpectedly, the U.S. said, for the first time accusing the world's largest automaker of breaking the law.

Already flooded with hundreds of private lawsuits, Toyota now faces a dilemma stemming from safety problems on several popular models — whether to accept a record $16.4 million fine that could be cast as an admission of wrongdoing, or fight the government at the cost of more bad publicity.

The Japanese automaker was weighing its options after the Transportation Department charged Monday that Toyota had hidden a "dangerous defect" and had failed to quickly alert regulators to the safety problems in such models as the best-selling Camry and Corolla. The company has two weeks to accept or contest the penalty.

The fine was announced the week after Toyota reported U.S. sales rose 41 percent in March with the help of no-interest loans and discount leases, signaling the company may be recovering from recalls of about more than 8 million vehicles worldwide for flaws that may cause unintended acceleration..

The Transportation Department's action showed “safety matters and they're going to be tough as nails,” Joan Claybrook, a former head of the National Highway Traffic Safety Administration, said in an interview. “That's very appropriate. They caught Toyota red-handed.”

The proposed fine is the most the government could levy, but further penalties are possible under continuing federal investigations.

Toyota Motor Corp. has recalled more than 6 million vehicles in the U.S., and more than 8 million worldwide, because of acceleration problems in multiple models and braking issues in the Prius hybrid.