The probe focused on the company’s hardwood flooring purchase orders and import declarations concerning the origin of the timber.
Advertisement
This is another bump in the road for the flooring company.
The Toano, Virginia, company says the settlement is unrelated to the controversy over a few of its laminate flooring from China, which CBS’ “60 Minutes” has reported contains high levels of the carcinogen formaldehyde.
More than 100 class action lawsuits over floors made in China have also been filed against Lumber Liquidators.
Shares of Lumber Liquidators have lost 78% so far this year.
The company has already reserved the amount to be paid in the first quarter of 2015. For the company to be guilty of these violations does not require that it had acted deliberately or with willful intent to violate the law, and Lumber Liquidators denies that it acted deliberately or with willful intent.
The agreement includes four misdemeanor due-care violations of the Lacey Act and a single felony charge for entry of goods by means of false statements. Recall that in its 2Q15 10Q, Lumber Liquidators disclosed that in May 2015, the California Air Resources Board (CARB) notified Lumber Liquidators that additional samples of finished products were obtained in 2014, a few of which, based on deconstructive testing, exceeded the CARB formaldehyde emissions limits for raw composite wood.
As part of its settlement with federal prosecutors, the company also agreed to implement an Environmental Compliance Plan to ensure compliance with environmental laws in the future.
“We are pleased to reach this agreement and resolve a legacy issue related to the Lacey Act”, the company’s chairman John M. Presley said in a press release. Lumber Liquidators will be permitted to sell the suspended engineered hardwood flooring and retain any proceeds of the sale, it said.
Advertisement
In addition, Lumber Liquidators settled a companion civil forfeiture case with the Department of Justice for $3.2 million.
