More fallout from the scandal that keeps on giving

Joerg Kerner, head of powertrain development at Porsche, has reportedly been arrested by German prosecutors investigating the Dieselgate emissions cheating affair.

A source has informed Reuters Kerner was taken into custody on Thursday, European time, and is being held as a flight risk.

The offices of Audi and Porsche were raided by German authorities earlier this week. A spokesperson told the wire service Kerner was one of three current and former employees targeted as part of the raids.

The Suddeutsche Zeitung understands one of the other men under investigation is a current member of Porsche's board of management.

In an internal memo seen by Reuters, Oliver Blume, Porsche's CEO, acknowledged the arrest and noted prosecutors were linking Porsche to Audi's malfeasance.

He told employees, "We reject these allegations and will do our utmost to clear up the matter." Blume asserted the SUV and sports car manufacturer doesn't produce or engineer the diesel engines it employs.

According to Automotive News Europe, Kerner joined Audi in 2004, and was involved in software and electronics design for engines and transmissions. The luxury brand is said to have engineered the first Volkswagen Group drivetrains capable of cheating their way through official emissions testing.

He reportedly had a close working relationship with Wolfgang Hatz, the Volkswagen Group's former chief engineer. Hatz was arrested last year, but continues to plead his innocence.

Kerner is also said to be a confidant of Matthias Mueller. Mueller was the CEO of Porsche before being parachuted into the top job at the Volkswagen Group after the news of the Dieselgate scandal broke. Mueller stepped down from his post last week.