Lumber Liquidators to pay $33 million for misleading investors about formaldehyde in laminate flooring
Lumber Liquidators, one of largest flooring retailers in the country, has agreed to pay a $33-million penalty for misleading investors about formaldehyde-laced laminate flooring from China.
The investigation and agreement with federal prosecutors in the Eastern District of Virginia stemmed from a 2015 “60 Minutes” investigation finding high levels of formaldehyde in Lumber Liquidators’ laminate flooring.
The Toano, Va., company agreed to pay a $19-million criminal fine and $14 million in forfeiture.
In a statement, U.S. Atty. G. Zachary Terwilliger said the company had “cooperated with the government’s investigation, completely replaced its senior executive team, and installed experienced executives who have displayed a commitment to building an ethical corporate culture.”
The Centers for Disease Control and Prevention found the level of the formaldehyde in the flooring at issue would increase a person’s risk of cancer and could cause respiratory issues for people with asthma as well as eye, nose and throat irritation for anyone.
Lumber Liquidators denied the allegations aired by “60 Minutes” at the time, according to prosecutors, and misled investors by withholding internal information that backed up the report.
The company has already agreed to pay $36 million in settlements to 760,000 customers who bought the laminate flooring. The company stopped selling laminate flooring from China in May 2015, and prosecutors said all employees involved in wrongdoing were either terminated or had resigned.
The company paid $23 million in sanctions, fines and penalties in 2016 for selling illegally smuggled wood from the Russian habitats of endangered tigers. But that settlement did not address the formaldehyde issue that had at the time just sparked new lawsuits.
Lumber Liquidators Holdings Inc. shares fell 3.1% Tuesday to $11.08.
Weiner writes for the Washington Post.
