WATCH ABOVE: 16×9’s investigation “Liquidating the Forests”
Lumber Liquidators stocks have plummeted in recent days as the company announced that the U.S. Department of Justice is “contemplating seeking criminal charges under the Lacey Act,” according to company corporate filings.
Last October, 16×9 reported that Lumber Liquidators offices had been raided in 2013 by U.S. law enforcement. The company was accused of violating the Lacey Act, a U.S. law that prohibits selling wood that is illegally cut overseas.
The Environmental Investigation Agency, a conservation group, had previously accused the company of buying much of its wood from Xingjia, a Chinese business. EIA said that Xingjia “had links to recent illegal logging cases.”
16×9 purchased some of the same controversial wood in Lumber Liquidators stores in Canada that was traced back to a Xingjia facility. 16×9 also obtained shipping records showing that Xingjia sent over $5.7 million dollars-worth of wood to the port of Vancouver bound for North American store shelves.
During Lumber Liquidators earnings conference call on Wednesday, management also told investors that more bad publicity was coming as American newsmagazine show 60 Minutes was about to do a report on the company.
“We now believe the news program 60 Minutes will feature our company in an unfavourable light with regard to our sourcing and product quality, specifically relating to laminates,” said company president and CEO Rob Lynch in an earnings conference call, according to a transcript of the conversation posted online.
Last fall, 16×9 reported that a lawsuit filed in California against Lumber Liquidators said that some of the company’s Chinese-made laminate floors had unacceptable levels of formaldehyde. The lawsuit also alleged that there were insufficient warning labels on these products.
Lumber Liquidators in the past denied any wrongdoing saying its flooring “meets relevant environmental standards and undergoes rigorous, independent, third-party testing, including those pertaining to formaldehyde emissions.” Lumber Liquidators has also launched a countersuit claiming trade libel and unfair business practices.
In the transcript Robert Lynch also called Lumber Liquidators “a leader in safety”.
Another alleged Lumber Liquidators supplier made headlines in January 2015 when EIA reported that Beryozoviy, a company it says supplied high value timber to Lumber Liquidators had been convicted of organized crime by a Russian court. Officials with Beryozoviy were found guilty of 15 counts of illegal logging occurring between 2010-2012 and of participation in a criminal network according to EIA.