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Lumber Liquidators Announces Settlement Related To Lacey Act Investigation

The following excerpt is from the company's SEC filing.

-- Lumber Liquidators (NYSE: LL) today announced a settlement with the Environment and Natural Resources Division of the Department of Justice (“DOJ”) related to the Company’s compliance with the Lacey Act, a U.S. conservation law regarding the protection of plants, fish and wildlife. This concludes the DOJ’s inquiry launched in 2013, which primarily related to certain foreign suppliers harvesting more timber than their permits allowed in foreign jurisdictions, such as Eastern Russia, and the Company’s importation of flooring products made from this timber. This matter focused on s ome of the Company’s hardwood flooring purchase orders and import declarations made concerning the origin of the timber of those orders.

Lumber Liquidators fully cooperated with federal authorities and is continuing to make significant enhancements to its sourcing and compliance practices. This settlement is unrelated to current California Air Resources Board (“CARB”) related claims around certain Lumber Liquidators products.

As part of the settlement, Lumber Liquidators has agreed to plead guilty to violations of a Customs law and the Lacey Act, and pay a combined total of $10.0 million in fines, community service payments and forfeited proceeds. The payments include a $7.8 million fine, community service contributions of $880,825 and $350,000 to the National Fish and Wildlife Foundation and the Rhinoceros and Tiger Conservation fund, respectively, and a $969,175 forfeiture payment. The Company reserved for this amount in the first quarter of 2015.

The agreement includes four misdemeanor due care violations of the Lacey Act and a single felony charge for entry of goods by means of false statements. These violations, including the Class E felony, do not require the Company to have acted with a deliberate or willful intent to violate the law, and the Company did not stipulate that it acted with such a deliberate or willful intent. Lumber Liquidators also has agreed to implement an Environmental Compliance Plan to ensure future compliance with the Lacey Act.

In addition, as previously disclosed, the Company determined in the second quarter of 2015 that there were Lacey Act compliance concerns related to a limited amount of its engineered hardwood flooring. As a result, the Company suspended sales of approximately $4.1 million of this product pending further investigation, and brought this matter to the attention of the DOJ. During its investigation, the Company determined that there were no compliance concerns with respect to approximately $0.9 million of the suspended engineered...


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