Lumber Liquidators reported that the Department of Justice has launched a criminal investigation of the company sale of laminate flooring from China.
A CBS News 60 Minutes report last month exposed concerns that Lumber Liquidators’ laminate flooring contains unsafe levels of formaldehyde, a dangerous carcinogen that can also cause short- and long-term respiratory problems.
The ’60 Minutes’ report suggested that Chinese mills manufacturing the product were not complying with the California Air Resources Board emission standard and were falsely labeled as compliant.
“In March 2015, we received a grand jury subpoena issued in connection with a criminal investigation being conducted by the U.S. Attorney’s Office for the Eastern District of Virginia,” Lumber Liquidators said in a filing with the Securities and Exchange Commission (SEC). “In addition, on March 11, 2015, we received a letter from the New York Regional Office of the SEC requesting that, in connection with an inquiry by the SEC staff, we preserve certain information. Based on the subpoena and SEC request, we believe the focus of both the U.S. Attorney investigation and SEC staff inquiry are connected to recent concerns about our laminate flooring sourced from China and primarily relate to compliance with disclosure and trading requirements under the securities laws. We are fully cooperating with the U.S. Attorney’s subpoena, the SEC request to preserve information and the related investigations by the U.S. Attorney and SEC staff.”
“In March 2015, we received requests for information from various state attorneys general regarding our laminate flooring sourced from China. We have been fully cooperating with these requests.”
“On March 4, 2015, we received notice from the Consumer Product Safety Commission (CPSC) that it has requested samples of our laminate flooring manufactured in China. We have been fully cooperating with the CPSC and have provided testing and safety information to the CPSC staff.”
“Finally, we believe that the California Air Resources Board (CARB) is regularly looking at the entire industry to ensure compliance with its emissions standards. As we have previously disclosed, while conducting routine inspections of our products, CARB has performed “deconstructive” testing on our products as well as (we believe) products from others in the industry. In CARB’s preliminary findings, some of the samples of our product that they deconstructed and tested exceeded the CARB limits for raw composite wood cores. This could occur for numerous reasons, including one or more of the variability factors associated with this type of testing.”