Gree Subsidiary Sentenced for Failure to Report Dangerous Dehumidifiers

LOS ANGELES – The City of Industry-based subsidiary of a Chinese appliance company was sentenced today to pay a $500,000 criminal fine after pleading guilty to failing to notify the U.S. Consumer Product Safety Commission (CPSC) that millions of dehumidifiers it sold to domestic consumers were defective and could catch fire.

Gree USA Inc. was sentenced this morning after pleading guilty in January to a felony violation of the Consumer Product Safety Act (CPSA). The fine, along with provisions to pay restitution to victims, was part of a $91 million resolution with three related Gree companies that represents the first corporate criminal enforcement action ever brought under the CPSA.

Gree USA, a U.S. subsidiary of Hong Kong Gree Electric Appliances Sales Co., Ltd. (Gree Hong Kong), entered into a plea agreement in connection with a criminal information filed in 2021. Gree USA pleaded guilty to one felony count under the CPSA of willfully failing to report consumer product safety information to the CPSC.

Gree Electric Appliances, Inc. of Zhuhai (Gree Zhuhai), a global appliance manufacturer headquartered in Zhuhai, China, and Gree Hong Kong entered into a deferred prosecution agreement (DPA) in connection with the same case. Under the terms of the DPA, Gree Zhuhai and Gree Hong Kong agreed to a total monetary penalty of $91 million and also agreed to provide restitution for any uncompensated victims of fires caused by the companies’ defective dehumidifiers. Consistent with Justice Department policy, the DPA with Gree Zhuhai and Gree Hong Kong credits the Gree Companies’ earlier payment of $15.45 million in civil penalties to the CPSC against the agreed-upon $91 million total monetary penalty.

According to court filings, Gree Zhuhai, Gree Hong Kong and Gree USA (collectively, the Gree Companies) knew their dehumidifiers were defective, failed to meet applicable safety standards, and could catch fire, but the companies failed to report that information to the CPSC for months. The companies reported and recalled the dehumidifiers only after consumer complaints of fires and resulting harm continued to mount.

“This corporation endangered the safety of American consumers by failing to promptly report a known problem with their defective humidifiers,” said United States Attorney Martin Estrada. “Fortunately, authorities were able to stop this practice before Gree USA could cause greater harm. This historic case underscores our commitment to protect the public from dangerous products that could cause consumers real harm and to hold accountable corporate entities who knowing violate our laws in promotion of their greed.”

“Homeland Security Investigations (HSI) works tirelessly to protect the American consumer from health and safety risks posed by sub-standard products entering the United States,” said HSI Los Angeles Acting Special in Charge Eddy Wang. “HSI, the Department of Justice, and the Consumer Protection Safety Commission will continue to hold corporations accountable for placing profits above people.”

As part of the Gree USA plea agreement and the Gree Zhuhai and Gree Hong Kong DPA, the Gree Companies admitted that, between 2007 and 2013, they sold in the United States more than two million dehumidifiers manufactured by Gree Zhuhai and imported by Gree Hong Kong. In September 2012, employees of the Gree Companies, including high-level executives, learned that the Gree dehumidifiers had defects that could cause them to overheat and catch fire, and that consumers had reported fires caused by the dehumidifiers. Those same employees also knew of the obligation to report dangerous consumer products to the CPSC. Despite this knowledge, Gree USA continued to sell the defective dehumidifiers in the United States for at least another six months. The Gree Companies delayed reporting knowledge of the fires to the CPSC for approximately six months and did not report the defects in the dehumidifiers for approximately nine months. Ultimately, Gree Zhuhai recalled the defective dehumidifiers almost a year after learning about the products’ dangerous defects.

“Today’s sentencing of Gree USA is part of the Department of Justice’s ongoing efforts to hold accountable companies and executives that purposefully delay reporting dangerous consumer products to the CPSC,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Department will continue to work closely with the CPSC to ensure consumers’ safety.”

“Today’s sentencing should serve as an example that companies will be held to account when they put profits before consumer safety,” said Chair Alex Hoehn-Saric of the CPSC. “The egregious behavior detailed in this case cannot be tolerated, and we are grateful for the support of the Department of Justice in bringing this company to justice and keeping consumers safe.”

The United States Attorney’s Office and the Consumer Protection Branch of the Justice Department’s Civil Division previously indicted Charley Loh, 64, of Arcadia, and Simon Chu, 67, of Chino Hills – respectively, the CEO and chief administrative officer of Gree USA – with felony CPSA and wire fraud charges for their alleged roles in the failure to report the defective dehumidifiers. Loh and Chu have pleaded not guilty and are scheduled for trial on November 7 in Los Angeles.

An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

HSI investigated this case.

This matter was prosecuted by Assistant U.S. Attorney Joseph Johns of the Environmental and Community Safety Crimes Section, along with Assistant Director Allan Gordus and Trial Attorneys Natalie Sanders and Maryann McGuire of the Justice Department’s Consumer Protection Branch. Patricia Vieira of the CPSC’s Office of General Counsel provided substantial assistance.