Two executives sentenced for hiding fire risks linked to faulty dehumidifiers.
Two men from California have been sentenced to prison after being found guilty of hiding serious dehumidifier risks from the government. The case is the first of its kind involving criminal charges for not reporting product hazards under federal consumer safety laws. Both men were high-level executives of companies that imported and sold household dehumidifiers, even after learning the units had a track record of catching fire.
Simon Chu, age 70, and Charley Loh, age 67, were both handed prison terms in a Los Angeles courtroom. The judge sentenced Chu to just over three years and Loh to over three years as well. They will also spend three years under government supervision once released. In addition, they were ordered to pay fines. The court found they were responsible for keeping quiet about major safety problems connected to each dehumidifier made by a Chinese company and sold under their management in the United States.
The law says that companies selling goods like appliances or electronics must quickly alert regulators if those products are dangerous. That includes executives and others in leadership positions. In this case, the government said the men knew for months that the dehumidifiers posed fire risks. Despite reports of fires and testing that confirmed the problems, they didn’t tell the Consumer Product Safety Commission. Instead, they continued to sell the units.
Evidence presented during the trial showed that by late 2012, they were aware of several serious issues with the products. The units were manufactured overseas and imported by companies they controlled. Many of the fires linked to these dehumidifiers caused property damage, and there were hundreds of complaints. But rather than report what they knew, the two kept their silence and let the sales continue.
The result was significant damage to homes across the country. In total, more than 450 fires and millions of dollars in property loss were tied to the affected products. The situation led to several major recalls over the years. Some of the models involved are still under active warnings by the Consumer Product Safety Commission. The most recent alerts again stress that owners of these units should stop using them immediately.
Officials from the Justice Department and consumer safety agencies said this case sends a strong signal to company leaders. Those who ignore safety laws and put others at risk can face time behind bars. The sentences handed down in this case show how seriously the law treats violations that threaten public safety.
The companies involved were also held accountable. One of the businesses connected to Chu and Loh pleaded guilty and paid a fine as part of a much larger agreement involving multiple international firms. That settlement totaled over $90 million and included money meant to help people harmed by the faulty products.
The dehumidifier case was investigated by Homeland Security and prosecuted by a team from the Justice Department and the U.S. Attorney’s Office in California. Consumer protection lawyers also worked closely with government safety experts to bring the case to court.
Even though this case marked the first criminal prosecution of its kind under the product safety law, officials say it likely will not be the last. The growing number of imported goods and the potential for harm make it more important than ever for companies to take safety reporting rules seriously. Executives who fail to do so, and knowingly allow dangerous products to reach people’s homes, may face criminal charges in the future.
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