As part of the agreement, the company agreed to pay $13.2 million to end a federal investigation. Sentencing was set for February 1 in U.S. District Court in Norfolk.
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Lumber Liquidators was accused of using timber illegally logged in Far East Russian Federation and concealing the timber’s source.
The please agreement is said to be unrelated to the controversy that erupted after a CBS “60 Minutes” report exposed that a few of Lumber Liquidators’ laminate flooring sourced from China contained high levels of the carcinogen formaldehyde.
Under this plea agreement, Lumber Liquidators will pay a multi-million dollar penalty, forfeit millions in assets, and must adhere to a rigorous compliance program. According to the DOJ, this is the first felony conviction for import of illegal timber and largest fine ever under The Lacey Act.
In addition to paying $10 million in damages, the company will be required to establish a strict system of risk assessment in all of its supply chains.
That law originally banned trafficking in illegal wildlife, but was later amended to include plants and plant products.
“We appreciate the opportunity to have collaborated with the DOJ to develop an Environmental Compliance Plan, which we believe when fully implemented will be one of the strongest and most comprehensive in the industry”, Jill Witter, Lumber Liquidator’s chief compliance and legal officer, said in a statement. The plea agreement notes that the facts it contains “do not represent the entirety of the government’s evidence against the defendant”. Numerous declarations claimed the flooring was made with Mongolian oak harvested in Germany, even though Mongolian oak does not grow there. In June 2013, Lumber Liquidators Holdings Inc announced that the Company has opened its 300th store, located in Las Vegas, Nevada. The shipments contained 385.5 cubic meters of oak flooring worth $969,175.99.
In September 2013, investigators with the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations unit and the U.S. Fish and Wildlife Service raided the Lumber Liquidators Toano offices.
One of the largest specialty retailers of wood flooring in America, most of the company’s profits came from importing wood from mills and manufacturers outside of the country.
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Lumber Liquidators was placed on probation Thursday for a term of five years.
