Lumber Liquidators reported Wednesday that the Justice Department is seeking criminal charges against the Virginia-based company over imported laminate flooring.
The Associated Press reported that federal prosecutors sought charges under the Lacey Act, a sprawling conservation law dating back more than a century that, in part, bans illegally sourced wood products.
Company officials estimated that the charges could ultimately cost Lumber Liquidators about $10 million. The company added that more than 100 class-action lawsuits are pending over its flooring, while the U.S. Consumer Product Safety Commission also began investigating the company.
Last month, a "60 Minutes" report revealed that testing by an environmental group found Lumber Liquidators' Chinese-made laminate flooring exceeded California standards for formaldehyde.
The company disputed the test methodology and pledged to offer free air testing supplies to its customers, while subsequent tests by a financial firm found the flooring effectively sealed in formaldehyde emissions.
Nonetheless, this week's report showed a net loss of $7.8 million in March, while last month's store sales declined by nearly 18 percent. Analysts previously expected a profit; company stock prices tumbled in early trading Wednesday.
In addition, Lumber Liquidators revealed that CFO Dan Terrell will depart in June after nearly nine years with the company.
CEO Robert Lynch said during a conference call that Lumber Liquidators continues to diversify its sourcing of laminate flooring into Europe and North America.
