(Adds statement by Lamborghini)
By Sara Rossi
MILAN, Oct 15 (Reuters) - Prosecutors in Italy are investigating local managers at Volkswagen and its sports car business Lamborghini for alleged fraud after the German carmaker admitted to cheating on emissions tests for diesel vehicles.
Mario Giulio Schinaia, chief prosecutor in the northern Italian town of Verona, where Volkswagen has its Italian headquarters, said that police had conducted searches at both Volkswagen and Lamborghini's head offices on Thursday.
The investigation of managers at the two companies is part of a legal procedure connected with the searches, he said.
"If we want to be able to prove that (cars) have been sold by people who knew they were committing a crime, we need proof that people were aware," Schinaia said.
"It is one thing if I sell water and pretend it's wine but if I sell water believing it is wine it's different."
Bologna-based Lamborghini, which Volkswagen acquired in 1998, said the searches stemmed from the fact that Automobili Lamborghini SpA was the sole owner of VW Group Italia SpA.
"We are cooperating closely with the authorities," Lamborghini said in a statement.
Volkswagen declined to comment.
Last month, a judicial source said prosecutors in Turin were looking into whether emissions data from Volkswagen cars in Italy had been manipulated.
Italian consumer group Codacons has filed a class action lawsuit against Volkswagen, accusing the company of deceiving car owners and potentially harming the environment.
Volkswagen is grappling with the fallout from the emissions scandal which some analysts estimate could cost the group as much as 35 billion euros to cover vehicle refits, regulatory fines and lawsuits.
Volkswagen has said it may have installed software that enabled it to cheat diesel emissions tests on up to 11 million diesel vehicles worldwide.
On Wednesday the head of Volkswagen's Italian operations told parliament in Rome that the company's investment plans for Italy would not be affected. (Additional reporting by Andreas Cremer in Frankfurt, Valentina Accardo in Bologna, Francesca Piscioneri in Rome and Jan Schwartz in Hamburg.; Writing by Valentina Za; Editing by Jane Merriman, Greg Mahlich)