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Lumber Liquidators pleads guilty to environmental crimes, agrees to pay more than $13M

Lumber Liquidators pleads guilty to enviromental crimes

Lumber Liquidators pleaded guilty on Thursday in federal court to environmental crimes related to illegal importation of hardwood flooring, the Department of Justice announced.

The settlement is unrelated to the controversy over some of its laminate flooring from China, which CBS' "60 Minutes" has reported contains high levels of the carcinogen formaldehyde.

In total, Lumber Liquidators agreed to pay $13.13 million — including a $7.8 million criminal fine and more than $1.23 million in community service payments.

The plea had little effect on the company's stock: Shares traded at about 2 percent higher on the day around the time of the announcement. Lumber Liquidators announced earlier this month that it had reached a settlement related to Lacey Act violations, which would include the $7.8 million criminal fine.

"We are pleased to reach this agreement and resolve a legacy issue related to the Lacey Act," John M. Presley, the Lumber Liquidators chairman, said in a news release on October 7. "We will continue to focus on strengthening Lumber Liquidators across every area of the organization and executing on our value proposition to improve operational efficiencies and deliver value to our stakeholders."

A customer enters the Lumber Liquidators store in Denver.
Rick Wilking | Reuters

The felony conviction says that Lumber Liquidators flooring was manufactured in China from timber that had been illegally logged in eastern Russia.

"Lumber Liquidators' race to profit resulted in the plundering of forests and wildlife habitat that, if continued, could spell the end of the Siberian tiger," Assistant Attorney General John C. Cruden for the Justice Department's environment and natural resources division, said in a press release on the guilty plea.

A joint statement of facts showed that Lumber Liquidators "repeatedly failed to follow its own internal procedures and failed to take action on self-identified 'red flags,'" including suppliers who couldn't provide legal documentation.

The DOJ also said that Lumber Liquidators falsely reported the kinds of wood it imported into the U.S. market. Those inaccurate statements on Lacey Act declarations lead to the felony charge of "Entry of Goods by Means of False Statements."

The Justice Department said Thursday's plea represents the first felony conviction for the import of illegal timber and the largest fine ever under the Lacey Act.

That law originally banned trafficking in illegal wildlife, but was later amended to include plants and plant products. It was the first ban in the world on trading in illegally sourced wood products, according to the Forest Legality Alliance.