In a landmark case for corporate responsibility, two executives have been handed prison sentences for failing to inform regulatory authorities about dangerous consumer products. Simon Chu, aged 70, and Charley Loh, 67, both part-owners of distribution companies linked to Gree Zhuhai, were found guilty of conspiracy to defraud the United States Consumer Product Safety Commission (CPSC) and failing to furnish timely information about defective dehumidifiers that sparked more than 450 fires.
Chu received a 38-month prison term alongside a $5,000 fine, while Loh was sentenced to 40 months and fined $12,000, according to the U.S. Department of Justice. Assistant Attorney General Brett Shumate emphasized that "Federal law requires companies to report potentially dangerous products to the Consumer Product Safety Commission to help protect consumers from harm," underscoring the gravity of the executives' failure to act.
United States Attorney Bill Essayli highlighted the executives' prioritization of profit over public safety, stating, "Corporate executives who choose to ignore the law will be held accountable – especially when death and serious injuries result." The defective products in question, associated with millions in property damage, were part of a major recall involving Gree Electric Appliances Inc. of Zhuhai.
Despite reports of their products causing fires, Chu and Loh continued to sell them to retailers. It was not until at least six months later that they disclosed the hazards associated with these dehumidifiers. CPSC Acting Chairman Peter Feldman commented, "These Chinese-made products were hazardous, and the defendants knew it," praising the work of the CPSC and the Justice Department in securing the convictions.
The CPSA mandates that any product defects potentially causing substantial hazards or posing significant risks of injury or death must be immediately reported to the CPSC. The duty extends to directors, officers, and agents of the companies involved. This case, signifies the first time that corporate executives have been prosecuted under the CPSA for such reporting failures.
As part of the legal proceedings, Gree USA was fined $500,000 after pleading guilty to the same reporting failure, a component of a larger $91 million criminal resolution with affiliated Gree companies. The case was investigated by Homeland Security Investigations with the CPSC's Office of General Counsel also lending support in the prosecution.
