Executives Sentenced for Not Reporting Defective Dehumidifiers Linked to 450 Fires

Two executives were sentenced to federal prison for conspiring to defraud the United States and for failing to report information about defective dehumidifiers linked to multiple fires.

According to the U.S. Department of Justice, this was the first criminal enforcement action against corporate executives for failing to report required information brought under the Consumer Product Safety Act.

Simon Chu, 70, of Pomona, was sentenced to 38 months in federal prison and was fined $5,000 by U.S. District Judge Dale S. Fischer. Fischer also sentenced Charley Loh, 67, of Arcadia, to 40 months in federal prison and fined him $12,000.

The executives were found guilty by a jury in 2023 of one count of conspiracy to defraud the CPSC and one count of failure to furnish information as required by the CPSA.

The defective dehumidifiers sold by Chu’s and Loh’s companies were included in multiple recalls of a larger number of defective dehumidifiers manufactured by Gree Electric Appliances Inc. of Zhuhai in China. Recall notes reportedly stated that more than 450 reported fires and millions of dollars in property damage have been linked to the recalled Gree Zhuhai dehumidifiers.

Chu was part owner and chief administrative officer of Gree USA Inc. and another corporation in the City of Industry, that distributed and sold to retailers for consumer purchase dehumidifiers that were made by Gree Zhuhai in China. Loh was part owner and CEO of the same two corporations.

The CPSA requires manufacturers, importers and distributors of consumer products to immediately report 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. That duty also applies to directors, officers and agents of those companies.

By September 2012, Chu, Loh and their companies reportedly received multiple reports that their Chinese dehumidifiers were defective, dangerous and could catch fire. They also reportedly knew that they were required to report this to the CPSC immediately. Despite their knowledge of consumer complaints of dehumidifier fires and test results showing defects in the dehumidifiers, Chu and Loh failed to disclose their dehumidifiers’ defects and hazards for at least six months while they continued to sell their products to retailers, for resale to consumers, according to the DOJ.

The jury acquitted both defendants of one count of wire fraud.

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 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.