Company agrees $16m penalty for failing to report faulty AC units
6th August 2025
USA: A company which sold dangerous portable air conditioners has agreed a civil penalty and restitution totalling over $16.4m.
Royal Sovereign International Inc, a New Jersey corporation that sold office and home appliances, pleaded guilty today to a criminal charge under the US Consumer Product Safety Act with failing to report information concerning portable air conditioners allegedly linked to more than 40 fires and one death.
According to court documents, Royal Sovereign, which also traded as Royal Centurian Inc, imported and sold more than 33,000 defective Chinese air conditioners between 2008 and 2014. The air conditioners were defective due to a faulty drain motor that could electrically short and cause them to catch fire and burn uncontrollably.
The company’s CEO, Takwan Lim, previously signed a settlement agreement with the US Consumer Product Safety Commission (CPSC) stemming from allegations that a related entity, Royal Sovereign Corporation, sold certain portable ceramic heaters that posed a fire risk. Royal Sovereign recalled the defective air conditioner models in 2021.
In pleading guilty, Royal Sovereign admitted that, despite knowing of the defects from numerous consumer complaints and lawsuits, it wilfully failed to report information about the air conditioners immediately to CPSC, as was required by law.
According to the information filed in the case, the company misled the CPSC in November 2010 by telling the agency that it was aware of only two fire incidents related to the air conditioners and that the products had been discontinued. In reality, the government alleged, the company was aware of at least 16 fires and continued to distribute the products anyway. According to the recall notice, a woman died in August 2016 from smoke inhalation and her two children were injured after their Royal Sovereign air conditioner caught fire.
Royal Sovereign agreed to a $16,025,000 civil penalty and was required to pay $395,786.48 in restitution to victims.
Takwan Lim, the former CEO of the company, died in 2023. Royal Sovereign has permanently ceased all company operations related to the marketing, sale, or distribution of consumer products. In recognition of the company’s limited ability to pay, all but $100,000 of the civil penalty was suspended.
Further information about the products that were recalled are contained on the CPSC website.
