March 12, 2019
Lumber Liquidators agreed to pay $33 million in criminal fines and forfeitures for knowingly making false and misleading statements regarding formaldehyde emissions from laminate flooring imported by the company from China. In March, 2015, 60 Minutes reported that laminate flooring sold by Lumber Liquidators in the United States did not meet California Air Resources Board (CARB) emission standards for formaldehyde and featured undercover videos and laboratory test results. The company filed an SEC Form 8-K broadly denying the allegations in the 60 Minutes episode and asserting that Lumber Liquidators complied with CARB regulations. The statement, however, omitted material facts known to the company. The company also entered into a deferred prosecution agreement, agreeing to implement internal control procedures and cooperate with ongoing investigations. In a separate agreement with the SEC, Lumber Liquidators will also disgorge over $6 million in profits and prejudgment interest, which amount will be credited against the criminal penalties. DOJ; SEC; USAO ED VA.
Tagged in: Criminal Proceedings, Financial and Investment Fraud, Misrepresentations, Securities Fraud,