On June 16, 2025, the first-ever sentences were handed down in a criminal prosecution for failure to report under the Consumer Product Safety Act (CPSA). Judge Dale S. Fischer of the U.S. District Court for the Central District of California sentenced two former Gree USA, Inc. (Gree USA) executives to 38 and 40 months in prison, respectively, for conspiracy to defraud the U.S. Consumer Product Safety Commission (CPSC) and for failure to report information related to defective dehumidifiers under Section 15 of the CPSA.
Background on Gree Proceedings
The two former Gree USA executives were first indicted on March 28, 2019. According to the indictment, Charley Loh was part owner and Chief Executive Officer of Gree USA and Simon Chu was part owner and Chief Administrative Officer of Gree USA.
By way of background, Gree USA imported and sold residential dehumidifiers made in China by Gree Electric Appliances, Inc. of Zhuahai (Gree Zhuahai).
The indictment revealed that Chu and Loh received a video from a customer in July 2012, which showed a burning dehumidifier like those imported, distributed, and sold by Gree USA. In August 2012, Chu had the plastic used in the dehumidifiers tested to see if it would burn, and testing revealed that the plastic would indeed burn. The government alleged that, knowing about these testing results and continued reports of dehumidifiers catching on fire, Chu and Loh continued to sell the defective dehumidifiers to retail companies in the U.S. until April 2013, without notifying them of any defect or hazard. Chu and Loh did not provide any information about the defective humidifiers to the CPSC until March 2013. When they did, they did not initially report any of the dehumidifiers' defects and hazards.
The defective dehumidifiers were first recalled on September 12, 2013, in conjunction with the CPSC. Approximately 2.2 million dehumidifiers in the United States were initially recalled. Since then, the defective dehumidifiers have been part of multiple recalls, and at least 450 reported fires and $19 million in property damage have been linked to the recalled dehumidifiers.
On March 25, 2016, the CPSC announced that it obtained a $15.45 million civil penalty in a settlement agreement with Gree Zhuhai, Hong Kong Gree Electric Appliances Sales Co., Ltd. (Gree Hong Kong), and Gree USA (collectively, the Gree Companies).
Later, on October 29, 2021, the Department of Justice made it known that Gree Zhuhai and Gree Hong Kong entered into a deferred prosecution agreement. Gree Zhuhai and Gree Hong Kong agreed to pay a penalty of $91 million and to provide restitution for any uncompensated victims of fires caused by the defective dehumidifiers. Gree USA, which pleaded guilty to willfully failing to report consumer product safety information to the CPSC, was sentenced on April 24, 2023 to pay a $500,000 criminal fine as part of the $91 million resolution involving the other two Gree Companies.
Key Takeaways
The two former Gree USA executives' recent sentencing is an important milestone in product safety law – the first-ever sentencing of corporate executives for failure to report information related to a defective product under the CPSA. While the CPSC has not historically used criminal enforcement as much as it has used civil enforcement, the Gree USA executives' sentencing serves as a stark reminder that criminal penalties may be assessed against companies that manufacture, import, distribute, or sell consumer products, as well as their corporate leaders, for failing to report known safety incidents in a timely manner. We urge these companies and their executives to review our list of lessons learned from this case, previously covered by our team, to mitigate enforcement action-related risks.
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