Lumber Liquidators Expecting U.S. Charges

     (CN) – Lumber Liquidators has told investors it expects to have to face criminal charges from the U.S. Department of Justice related to an ongoing investigation over imported products.
     In a regulatory filing on April 29, Lumber Liquidators, which touts itself as the nation’s largest specialty retailer of hardwood flooring, said the Justice Department has informed the company it is seeking criminal charges over its foreign sourcing.
     A report on the CBS television news magazine “60 Minutes” in March said that laminate flooring Lumber Liquidators sources from China contains high levels of formaldehyde, a colorless but strong-smelling chemical that has been classified as a probable human carcinogen by the U.S. Environmental Protection Agency.
     In its most recent Form 10-Q filing with the Securities and Exchange Commission, covering the quarter that ended on March 31, 2015, Lumber Liquidators says sealed search warrants were executed at its Toano, Virginia corporate headquarters in September 2013 by the Department of Homeland Security’s Immigrations and Customs Enforcement Division and the U.S. Fish and Wildlife Service.
     “Since then, the Company has been cooperating with the federal authorities, including the Department of Justice, in their investigation. In recent communications, the DOJ indicated that it is seeking criminal charges under the Lacey Act,” the filing says.
     In response, Lumber Liquidators said it has formed a special committee of its board of directors to make decisions surrounding the matter, and to “continue to communicate with the DOJ regarding its intentions and possible courses of action in this matter,” the filing says.
     A spokesperson for the Department of Justice declined to comment on the situation, saying only “This matter remains under investigation.”
     Lumber Liquidators’ filing also disclosed that it faces at least 100 pending class-action lawsuits related to its Chinese-made laminate flooring.
     During a conference call with investors on Wednesday, company CEO Robert Lynch said, “We care deeply about our customers.”
     Lynch also said the company has sent worried consumers about 13,000 free air testing kits, but declined to discuss any results he might be aware of and what Lumber Liquidators does or plans to do when a test comes back positive for the presence of formaldehyde.

%d bloggers like this: