Lumber Liquidators fined $10M based on allegations of illegally sourced wood

Almost one year after Global News’ investigative program 16×9 released its investigation into the sourcing of illegal wood from Russian forests by Lumber Liquidators, the U.S. retailer said it will pay $10 million in fines and plead guilty to five violations of U.S. environmental law, regarding some of its flooring products.

The U.S. Department of Justice found the company had sourced some of its wood from Russia and Myanmar, and contributed to illegal logging in Eastern Russia that threatens the habitat of wild Siberian tigers. Lumber Liquidators also should have known that the wood they were selling was illegally sourced, according to a statement from the DOJ.

MORE: Think that hardwood floor is made in Canada? Think again

Lumber Liquidators is one of the largest flooring retailers in the world, with over 300 stores across North America.

The company said it will plead guilty to violating the Lacey Act, a conservation law that protects plants, fish and wildlife, from false import declarations about the origin of the timber used in its hardwood flooring.

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The company denied the settlement is related to the controversy over some of its laminate flooring from China.

MORE: Tests show high levels of formaldehyde in Chinese-made flooring

Sascha Von Bismarck, executive director of the Environmental Investigation Agency (EIA), said he hoped the penalty will lead to changes within the company.

“Perhaps the business model changes when [Lumber Liquidators] can’t rely on stolen wood halfway around the world,” Bismarck said in an interview with Global News Thursday.

The company, based in Toano, Virginia, said Wednesday it will pay a $7.8 million fine, including community service payments of $880,825 and $350,000 to the National Fish and Wildlife Foundation and the Rhinoceros and Tiger Conservation Fund. Lumber Liquidators will also forfeit $969,175, although it was not disclosed who would receive the payment.

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WATCH: 16×9’s “Liquidating the Forests” follows the trail of illegal lumber stolen in Russia, shipped to China and sold in Canada.

Last October, 16×9 released its investigation into accusations the flooring company was buying wood illegally from operators with connections to organized crime in Russia’s Far East by the EIA, an international environmental group based in Washington, D.C.

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Lumber Liquidators had told Global News in October 2014 that “the sourcing, harvesting and manufacturing of all of [their] products are designed to meet or exceed all applicable U.S. and international laws.”

16×9 purchased some of the same controversial wood in Lumber Liquidators stores in Canada that was traced back to a Xingjia facility, with links to illegal logging.  16×9 had obtained shipping records showing that Xingjia, a Chinese company that has been accused of illegally sourcing its wood from Russia, sent more than $5.7 million dollars-worth of wood to the port of Vancouver bound for North American store shelves.

The 16×9 investigation also uncovered white oak floors suspected to have been manufactured by the company were sold in Lumber Liquidator stores in Toronto.

In their plea agreement, Lumber Liquidators admitted to illegally transferring inventory from Canada to the U.S. despite the fact that they had originally stated that Mongolian Oak harvested in Germany and transferred from a Canadian warehouse to the U.S. was legal.

The problem was, no Mongolian Oak grows in Germany. The claims made by the Chinese supplier were false and Lumber Liquidators knew it, especially after the allegations were allegedly flagged by an employee at the time.

Still, Lumber Liquidators imported 12 additional shipments, totalling almost $1 million, of the illegal wood.

Shortly after 16×9 released its investigation the company announced important new policies on sourcing and oversight of wood procurement, saying it will “purchase from sustainably grown and harvested forests with independent certification and we will source from these forests whenever available.”

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Von Bismarck said Thursday the fines and felony charges against Lumber Liquidators is “good news for forests and for other retailers, who buy wood legally and follow the rules.”

“This is a moment to celebrate, to have hope that playing by the rules will not be penalized,” he said.

*With files from Adam Miller, Sean O’Shea and Gil Sochat

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