CALIFORNIA – The U.S. Department of Justice (DOJ) announced June 16, that two California corporate executives were sentenced to federal prison terms for conspiring to defraud the U.S.
They also failed to report defective dehumidifiers tied to fires – the first such case under the Consumer Product Safety Act (CPSA).
Simon Chu, 70, of Pomona, was sentenced to 38 months in federal prison and was fined $5,000 by United States District Judge Dale S. Fischer.
Fischer also sentenced Charley Loh, 67, of Arcadia, to 40 months in federal prison and fined him $12,000.
A jury convicted the executives in November 2023 of conspiring to defraud the Consumer Product Safety Commission (CPSC) and failing to report under the CPSA.
Chu and Loh received reports that that their dehumidifiers were defective
Chu’s and Loh’s companies sold defective dehumidifiers that were part of larger recalls involving dehumidifiers manufactured by Gree Electric Appliances Inc. of Zhuhai (Gree Zhuhai) in China.
Recall notes stated that more than 450 reported fires and millions of dollars in property damage have been linked to the recalled Gree Zhuhai dehumidifiers.
Chu, part owner and chief administrative officer and Loh, CEO, co-owned Gree USA and another corporation that sold Gree Zuhai-made dehumidifiers.
The CPSA requires companies and their offices to immediately report product defects posing significant hazards or risks of serious injury, or death to the CPSC.
By September 2012, Chu, Loh and their companies received multiple reports that their dehumidifiers were defective, dangerous and could catch fire, according to the DOJ. They also knew that they were required to report this product safety information to the CPSC immediately.
Despite knowing about fire complaints and defects, Chu and Loh hid the hazard for six months while continuing to sell the dehumidifiers to retailers.
Gree USA was fined $500,000
In April 2023, Gree USA was fined $500,000 after pleading to not notifying the CPSC about defective 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.
“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,” said United States Attorney Bill Essayli.
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