Lumber Liquidators Agrees to Pay $10 Million to Settle Lacey Act, Customs Violations

The charges stem largely from false declarations the company made on Lacey Act declarations, including listing the wrong country of origin and type of wood for its imported flooring, according to a complaint filed in U.S. District Court in Norfolk, Virginia on Oct. 7. In some cases company employees knew the declarations were false; in others, the company should have known were it properly exercising due care, said the complaint. Some of the wood was Mongolian oak harvested in Far East Russia without the required authorization, with the amount imported by Lumber Liquidators far exceeding limits on harvesting set by the Russian government, it said.

Lumber Liquidators admitted its guilt as part of the settlement, though it did not admit to acting with “deliberate or willful intent,” according to a copy of the settlement agreement filed with the Securities and Exchange Commission, also on Oct. 7 (here). Of the $10 million potentially due from Lumber Liquidators, $7.8 million would comprise a criminal fine. The rest would include donations to plant and wildlife conservation programs and forfeited proceeds. Lumber Liquidators would also implement a Lacey Act compliance program as part of the settlement, and serve five years on probation. The settlement must still be approved by the District Court. The Justice Department did not comment, beyond providing a copy of its recently-filed court complaint.

In a separate but related settlement, Lumber Liquidators will pay another $3.2 million to settle potential Lacey Act violations from a line of engineered hardwood flooring, said the company’s press release. Lumber Liquidators recently suspended sales of the product while it investigated the potential violations, but will now resume sales, with the government accepting the payment instead of forfeiture, it said.

Lumber Liquidators cooperated with the Lacey Act investigation, and continues to cooperate with other ongoing investigations, it said. “Lumber Liquidators fully cooperated with federal authorities and is continuing to make significant enhancements to its sourcing and compliance practices,” it said in the press release. “The Company is continuing to cooperate with other agencies, including the Consumer Product Safety Commission, CARB, Securities and Exchange Commission and U.S. Attorney's Office for the Eastern District of Virginia, with respect to additional ongoing inquiries and legal proceedings unrelated to today's announced settlement,” it said.

Once implemented, the compliance plan required by the settlement “will be one of the strongest and most comprehensive in the industry," said Jill Witter, Lumber Liquidators’ chief compliance and legal officer. "The program is designed to ensure an unbroken and verified chain of custody and documentation of our products from the store all the way to the forest,” she said. "We have invested significant time and resources to strengthen our quality assurance procedures, from enhanced protocols designed to verify licensing, certification and regulatory compliance as well as product sample testing. We are also committed to strengthening our tools and training programs to encourage secure and anonymous reporting of any potential concerns.”

In light of the settlement, the International Wood Products Association urged all wood product importers to review their compliance procedures, in a statement issued Oct. 7 (here). “Compliance continues to be a challenge for companies that remain committed to fulfilling their responsibilities under the Lacey Act and other laws regulating wood products,” said IWPA Executive Director Cindy Squires, noting the trade association provides a training course on Lacey Act compliance.

Email ITTNews@warren-news.com for a copy of the complaint.