California Executives Sentenced for Continuing to Sell Dehumidifiers That Caught on Fire

California Executives Sentenced for Continuing to Sell Dehumidifiers That Caught on Fire

The two California men were sentenced for continuing to sell the fire-prone dehumidifiers.

Two executives from Southern California were sentenced this week to more than three years in prison each for failing to report defects in dehumidifiers, which were later linked to hundreds of fires and possibly four deaths, according to federal prosecutors and recall documents.

Simon Chu, 70, of Pomona, Calif., and Charley Loh, 67, of Arcadia, Calif., continued selling the dehumidifiers for at least six months after tests revealed a defect that caused them to catch on fire, according to prosecutors with the Justice Department.

The devices were sold nationwide through major retailers, including Home Depot, Lowe’s, Sam’s Club, Sears, Walmart and others, between 2011 and 2014, at prices ranging from $110 to $400, according to federal prosecutors.

A federal judge sentenced Mr. Chu to 38 months in federal prison and imposed a $5,000 fine. Mr. Loh received a 40-month sentence and a $12,000 fine.

“Corporate executives who choose to ignore the law will be held accountable — especially when death and serious injuries result,” Bill Essayli, the U.S. attorney for the Central District of California, said in a statement.

Both men were convicted by a Los Angeles jury in November 2023 of failing to report the defects to the Consumer Product Safety Commission and of conspiracy to defraud the United States by obstructing the safety commission, according to court records. They were found not guilty of a third charge of committing wire fraud.

The Justice Department said this was the first criminal enforcement action brought under the Consumer Product Safety Act, which was signed into law in 1972 by former President Richard M. Nixon.

In a statement, Steve Brody, a lawyer who represented Mr. Chu, criticized the Justice Department’s decision to bring the case and said the jury had rejected the government’s central fraud allegation. Mr. Brody argued that Gree, the Chinese manufacturer, had received more lenient treatment despite having misled the executives about the defects.

“We have been — and remain — deeply troubled by the Department of Justice’s decision to prosecute this case,” Mr. Brody said. “No one else has ever been prosecuted criminally under the statute, including for conduct that was far more egregious than anything even alleged in this case.”

Mr. Loh’s lawyer, Richard Steingard, said in a statement that he was disappointed that his client must serve time and called his prosecution selective.

“Mr. Loh intends on appealing his conviction and sentence and expects that the appellate court will see the profound unfairness in this isolated and unnecessary prosecution,” Mr. Steingard said.

In a separate criminal case, the Justice Department bought criminal charges against the company for which Mr. Loh and Mr. Chu were company officers, Gree USA, and against other companies involved in the manufacturing and sale of the dehumidifiers. Gree USA reached a plea agreement, and Gree Electric Appliances of Zhuhai and Hong Kong Gree Electric Appliances Sales reached a deferred prosecution agreement.

Requests for comment from Gree USA, Hong Kong Gree Electric Appliances Sales and Gree Electric Appliances of Zhuhai were also not immediately returned.

Federal prosecutors said that Mr. Chu and Mr. Loh had distributed the dehumidifiers through Gree USA and Gree Electric Appliances of Zhuhai.

The products were part of multiple recalls by the Consumer Product Safety Commission, which identified them among a larger group of defective units manufactured by Gree Electric Appliances in China, according to federal recall notices filed by the federal consumer safety agency.

More than 450 fires and millions of dollars in property damage were associated with the recalled Gree dehumidifiers, according to the recall notices.

The recall documents report four deaths of adults in house fires that were possibly caused by the dehumidifiers. In 2016, one person died in Ohio. In 2022, fires in Iowa and Missouri resulted in three more deaths.

In April 2023, Gree USA pleaded guilty to failing to report the product defects and was ordered to pay a $500,000 fine, according to federal prosecutors. The company also agreed to restitution as part of a $91 million criminal resolution involving themselves, Gree Electric Appliances of Zhuhai and Hong Kong Gree Electric Appliances.

The three companies agreed to pay a $15.45 million civil penalty to the government in 2016, according to a news release from the Consumer Product Safety Commission.

“By putting profits over the safety of others,” Mr. Essayli, the U.S. attorney, said in the statement, “these defendants created serious risks to consumers, and we will continue to prosecute those who endanger the public.”

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