Shares in Lumber Liquidators Holdings Inc. (NYSE:LL) rocketed nearly 12 percent in after-hours trading Wednesday, after North America’s largest seller of wood flooring settled with federal prosecutors over the importation of illegally harvested wood from eastern Russia. The company still faces a raft of lawsuits over the sale of laminate flooring products imported from China that contain high levels of formaldehyde.
“Lumber Liquidators fully cooperated with federal authorities and is continuing to make significant enhancements to its sourcing and compliance practices,” the company said in a statement released after markets closed Wednesday.
In 2013, the U.S. Justice Department sought criminal charges against the Toano, Virginia, company under the Lacey Act, a landmark law that extends criminal culpability to U.S. individuals and firms that are involved in the commercial trade of plants and animals in violation of foreign conservation laws. (The Lacey Act was nearly invoked against American hunter Walter James Palmer this summer over the killing of a lion in Zimbabwe.)
Lumber Liquidators agreed to pay $10 million for doing business with Russian suppliers of hardwood products that had been harvested illegally, including payments to the National Fish and Wildlife Foundation and the Rhinoceros and Tiger Conservation fund. The company admitted to four misdemeanors and one felony charge related to the entry of goods by false statements — namely that the Russian wood was harvested legally.
The company still faces charges and lawsuits over the import of Chinese laminate flooring after a “60 Minutes” report in March exposed levels of formaldehyde, a known cancer-causing chemical, that violate California’s air pollution standards. Congress adopted California’s rules nationally in 2010.
The laminate flooring was imported from China with labels claiming it was compliant with U.S. standards. Lumber Liquidators has said the flooring is safe but is continuing to cooperate with various agencies regarding “ongoing inquiries and legal proceedings unrelated to today's announced settlement,” the company said in Wednesday’s statement.