Two California businessmen were sentenced in Los Angeles, California, on Monday for conspiracy and failing to report information related to defective dehumidifiers linked to multiple residential fires.
U.S. District Court Judge Dale S. Fischer sentenced Simon Chu, 70, of Pomona, California, and Charley Loh, 67, of Arcadia, California, to serve 38 and 40 months in prison respectively, plus three years of supervised release, for their roles in a conspiracy to defraud the U.S. Consumer Product Safety Commission and in failing to furnish information as required by the Consumer Product Safety Act.
The court also ordered Chu and Loh to pay fines of $5,000 and $12,000, respectively, as part of their sentences. Chu and Loh were convicted on November 16, 2023, following a trial in Los Angeles.
According to court documents and evidence presented in court, Loh was a part-owner and the chief executive officer of Gree USA Inc. and another corporation in the City of Industry, California. Both companies imported and sold residential dehumidifiers manufactured in China by Gree Electric Appliances, Inc. of Zhuhai (Gree Zhuhai).
Chu was part-owner and chief administrative officer of the same two corporations.
The CPSA requires manufacturers, importers and distributors of consumer products to report “immediately” to the CPSC information that reasonably supports the conclusion that a product contains a defect that could create a substantial product hazard or creates an unreasonable risk of serious injury or death.
This duty also applies to the individual directors, officers and agents of those companies.
According to evidence presented in court, by September 2012, Chu, Loh and their companies had received multiple reports that their Chinese dehumidifiers were defective, dangerous and could catch fire.
They also knew that they were required to report this product safety information to the CPSC immediately.
Despite being aware of dehumidifier fires and tests revealing defects in the dehumidifiers, Chu and Loh failed to disclose these defects and hazards for at least six months, continuing to sell their products.
“Federal law requires companies to report potentially dangerous products to the Consumer Product Safety Commission to help protect consumers from harm,” said Assistant Attorney General Brett Shumate of the Justice Department’s Civil Division. “The Justice Department will continue to investigate and bring to justice companies and individuals who willfully evade these requirements and put the public in danger.”
The defective dehumidifiers sold by Chu and Loh’s two corporations were included in multiple recalls of a larger number of defective dehumidifiers manufactured by Gree Zhuhai.
According to the recall notices, more than 450 reported fires and millions of dollars in property damage were linked to the recalled Gree dehumidifiers.
“Corporate executives who choose to ignore the law will be held accountable – especially when death and serious injuries result,” said U.S. Attorney Bill Essayli for the Central District of California. “By putting profits over the safety of others, these defendants created serious risks to consumers, and we will continue to prosecute those who endanger the public.”
“These Chinese-made products were hazardous, and the defendants knew it,” said CPSC Acting Chairman Peter Feldman. “Today’s sentences are a clear message that the CPSC will take a hard line against executives who break American laws and endanger families. I commend the CPSC and Justice Department teams for their work to secure this outcome.”
Gree USA was sentenced in April 2023 to pay a $500,000 criminal fine after pleading guilty to failing to notify the CPSC about the problems with the dehumidifiers.
The fine, along with provisions to pay restitution to victims, was part of a $91 million criminal resolution with Gree USA, Gree Zhuhai and another related Gree company, Hong Kong Gree Electric Appliances Sales Co. Ltd. This resolution is the first corporate criminal enforcement action ever brought under the CPSA.
