Two Southern California executives are under indictment for their roles in a scheme involving defective and dangerous consumer products, the U.S. Department of Justice announced Friday.
Simon Chu, 63, of Chino Hills, and Charley Loh, 60, of Arcadia were charged Thursday with a conspiracy to commit wire fraud, to fail to furnish information under the Consumer Product Safety Act, and to defraud the U.S. Consumer Product Safety Commission, according to the DOJ.
In addition to the conspiracy charge, the indictment filed in Los Angeles federal court also charges both defendants with one count of wire fraud and one count of failure to furnish information under the CPSA.
According to the indictment, Simon Chu was part owner and chief administrative officer of two corporations in the city of Industry that imported, distributed and sold to retailers dehumidifiers for consumer purchase that were made in China.
The indictment further states that Loh was part owner and chief executive officer of the same two corporations.
The CPSA requires manufacturers, importers, and distributors of consumer products to report immediately to the agency 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.
The indictment alleges that as early as September 2012, Chu, Loh and their companies received multiple reports that their Chinese dehumidifiers were defective, dangerous and could catch fire. They also allegedly knew that they were required to immediately report the product safety information to the CPSC, according to the DOJ.
Despite their knowledge of consumer complaints of dehumidifier fires and test results showing problems with the dehumidifiers, the indictment alleges that 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.
“When corporate executives delay reporting defective consumer products to the (Consumer Product Safety Commission) it puts consumers at needless risk for injury or even death,” said Assistant Attorney General Jody Hunt of the DOJ’s civil division. “This prosecution reflects the Department of Justice’s commitment to enforcing product safety laws that protect consumers from product hazards. We will seek to hold accountable corporate executives who value profits over the safety of consumers by failing to immediately report their dangerous products.”
The indictment further alleges that as part of their scheme, Chu and Loh deliberately withheld information about the defective and dangerous Chinese dehumidifiers from the retail companies that bought the devices; the insurance companies that paid for damage caused by the fires resulting from the dehumidifiers; and the CPSC.
Loh and Chu allegedly continued to sell the Chinese dehumidifiers to retailers with false certifications that the products met safety standards; caused a company employee to solicit materials that would falsely portray to an insurance company that the dehumidifiers were safe and not defective; and sent an untimely report to the CPSC that falsely stated that the dehumidifiers were not defective or hazardous, according to federal prosecutors.
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