Lumber Liquidators pleads guilty to environmental crimes

Toano-based Lumber Liquidators plead guilty Thursday in federal court in Norfolk to environmental crimes related to its illegal importation of hardwood flooring.

According to the U.S. Department of Justice, the hardwood flooring retailer has agreed to pay more than $13 million for violating the Lacey Act, a federal law that protects plants, fish and wildlife.

The crimes related to Lumber Liquidator’s illegal importation of hardwood flooring, much of which was manufactured in China from timber that had been illegally logged in far eastern Russia, in the habitat of the last remaining Siberian tigers and Amur leopards in the world.  

Lumber Liquidators, however, still faces another federal investigation about the levels of formaldehyde, a carcinogen, in its Chinese-made laminate flooring, a concern that was the subject of a “60 Minutes” television report in March.

The formaldehyde controversy prompted a sharp drop in the Lumber Liquidators’ stock (it is down more than 75 percent for the year). CEO Robert Lynch also resigned unexpectedly in May and was replaced by company founder Thomas Sullivan.

Under the plea agreement, Lumber Liquidators has agreed to pay more than $13 million, including a $7.8 million fine; community service contributions of $880,825 and $350,000 to the National Fish and Wildlife Foundation and the Rhinoceros and Tiger Conservation fund, respectively; and a $969,175 forfeiture payment. The violations do not require the company to have acted with intent to break the law. According to the DOJ, this is the first felony conviction for import of illegal timber and largest fine ever under The Lacey Act.

Lumber  Liquidators also has agreed to implement an Environmental Compliance Plan to ensure future compliance with the Lacey Act. Lumber plans to pay the $10 million penalties over the next two years.

In addition, company also will pay the DOJ $3.2 million in lieu of civil forfeiture for some of its engineered hardwood flooring. Lumber Liquidators suspended sales of a limited amount of flooring earlier this year because of Lacey Act compliance concerns. The company now will be permitted to sell the flooring and keep the proceeds.

“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 earlier this month.