Lumber Liquidators to Pay $13M in Guilty Plea

(CN) - Lumber Liquidators pleaded guilty on Thursday to environmental crimes related to the illegal importation of hardwood flooring, the Justice Department announced Thursday.

Under the terms of the agreement, the company will pay $13.13 million, including a $7.8 million criminal fine and more than $1.23 million in community service payments.

According to court documents, Lumber Liquidators imported flooring manufactured in China 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," said Assistant Attorney General John Cruden of the Justice Department's environment and natural resources division.

A statement of facts that accompanied the plea agreement says that Lumber Liquidators purchased wood flooring that contained oak harvested in Far East Russia.

The Justice Department says Lumber Liquidator employees were aware that such purchases posed a compliance -- indeed, the company's own internal guidance lists "Russian oak" in the highest category of product risk --they nevertheless increased their purchases of Russian oak "until around the time of the government's execution of search warrants at LL's Virginia offices on Sept. 26, 2013."

The court documents go on to say that even when it became obvious that the company was importing illegally harvested timber from Far East Russia, and that documentation was fudged to hide the fact, Lumber Liquidator officials ignored "red flags" and "failed to exercise due care" and continued the shipments.

The settlement in unrelated to a Justice Department probe into allegations Lumber Liquidators knowingly imported wood products that contain unsafe levels of formaldehyde.

Since those allegations came to light in a report by CBS News' "60 Minutes" program, the company has been slapped with a series of lawsuits from both consumers and its shareholders, the latter of which claim Lumber Liquidators' environmental misdeeds cost them 13 percent of their stock equity.

In a statement, John Presley, Lumber Liquidators' chairman, said, "We are pleased to reach this settlement and resolve a legacy issue related to the Lacey Act.

"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," Presley said.

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