Simon Chu and Charley Loh, two company executives, were convicted under the Consumer Product Safety Act (CPSA). They have been found guilty of defrauding the U.S. Consumer Product Safety Commission (CPSC) and withholding required information as per an announcement by the U.S. Attorney's Office, Central District of California.
The duo, along with their respective companies, were implicated in the distribution and sale of defective residential dehumidifiers, which caused several fires. These faulty units, manufactured by Gree Electric Appliances Inc. of Zhuhai (Gree Zhuhai) in China, triggered more than 450 confirmed fires and significant property destruction. Details about the recalled dehumidifiers can be found at the CPSC website.
During the trial, it was uncovered that Chu served as part owner and chief administrative officer, while Loh was part owner and CEO of the corporations involved in distributing the Gree Zhuhai dehumidifiers to retailers. The CPSA mandates all manufacturers, importers, and distributors of consumer products to immediately report any products with substantial risk or hazard to the CPSC.
Reports of the dehumidifiers being defective and inflammable were brought to Chu and Loh's attention as early as September 2012. However, both executives, along with their companies, failed to disclose these issues for at least half a year while persisting in selling these hazardous products to retailers and consumers.
U.S. Attorney Martin Estrada expressed the importance of this verdict. "It is critical to hold corporate executives accountable for misconduct," he stated. "The importation and sale of defective consumer products can lead to injury and death, and this verdict sends a clear message that putting profits over safety will not be tolerated." Brian M. Boynton, Principal Deputy Assistant Attorney General, further stressed the necessity for businesses and employees to promptly report any known hazards related to consumer products as per the article of the U.S. Attorney's Office, Central District of California.
Demonstrating the Department of Justice's dedication towards public safety, Eddy Wang, Special Agent in Charge for Homeland Security Investigations Los Angeles, highlighted the importance of ensuring consumer products don't put the public at risk.
Although both executives were charged with one count of wire fraud, the jury acquitted them of the charge. However, they could face up to five years in federal prison for each count of conspiracy and failure to furnish information during the sentencing hearing scheduled for March 11.
Gree USA, earlier this year, was sentenced to pay a $500,000 criminal fine for concealing information about the defective dehumidifiers from the CPSC. The fine, supplemented with victim restitution, formed part of a $91 million criminal resolution with Gree USA, Gree Zhuhai, and Hong Kong Gree Electric Appliances Sales Co. Ltd.
