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13 Million US Dollar Fine For Timber Company

The largest hardwood flooring retailer in the United States is charged with importing illegally harvested timber from areas including forests in far eastern Russia.

20th October 2015

On October 7, Lumber Liquidators agreed to plead guilty to several violations of the Lacey Act, among other charges. The largest hardwood flooring retailer in the United States will have to pay a combined $13.2 million for importing illegally harvested timber from areas including forests in far eastern Russia and other compliance issues.

Under the plea agreement, Lumber Liquidators will plead guilty to a felony charge of entry of goods by means of false statements (smuggling) and four misdemeanor violations under the U.S. Lacey Act, a conservation law that makes it a crime to import wildlife taken in violation of state or foreign law. The Lacey Act was amended in 2008 to add plants to the list, including illegally sourced wood and paper products.

Since 2008, Lumber Liquidators imported millions of square feet of solid oak flooring from a manufacturer that freely describes its own illegal logging practices and that buys wood from suppliers that are under scrutiny by Russian authorities for illegal logging in one of the most biologically diverse and most threatened temperate forests in the world. The charges to which the company pleaded guilty include:

felony misdeclaration of Mongolian oak (Quercus mongolica), a tree found only in Northeast Asia, as originating in Germany;
transport of illegal timber from Russia declared as European oak (Quercus petraea);
importation of illegally harvested timber from Russia; and
false declaration of Myanmar timber as Indonesian mahogany.
Lumber Liquidators was first raided by federal authorities in 2013 following a widely publicized report by World Wildlife Fund detailing pervasive illegal logging in the Russian Far East and an accusation by the Environmental Investigation Agency that the company imported illegally harvested timber. The EIA tracked illegally harvested hardwoods across the Russian border into China, tracing the supply chains through China to a company that admitted to illegal logging and paying bribes, and acknowledged that its single biggest trading partner was Lumber Liquidators. By the first half of 2015 the company’s share price has declined by 90 percent from a 2013 high, its problems with the Lacey Act compounded by allegations that the company imported laminated wood products with illegal levels of formaldehyde.

A portion of the millions of dollars which Lumber Liquidators will pay in fines, community service and forfeited proceeds will go to the National Fish and Wildlife Foundation and the Rhinoceros and Tiger Conservation Fund. Half a million dollars is earmarked for a project on wood identification technologies to help enforce the Lacey Act. The Virginia-based company also will adopt an environmental compliance plan for a five-year probation period.

This is not the first time the Lacey Act has been invoked against illegally harvested timber since it was amended in 2008. In 2009, U.S. Fish and Wildlife Service agents seized several pallets of tropical hardwood entering a Florida port; the hardwood was found to be illegally sourced and was confiscated. Later that year, the musical instrument maker Gibson Guitar was charged with purchasing and importing illegally harvested wood materials into the United States from Madagascar and India; the company settled with the Justice Department in 2012. More recently, a Washington state wood buyer and his lumber mill were charged with purchasing illegally harvested big leaf maple from a national forest in violation of the Lacey Act. The August indictment marked the first use of the Lacey Act to prosecute illegal loggers within the boundaries of the United States.

The Gibson case, the big leaf maple indictment and now the Lumber Liquidators plea all show this law has teeth. Smart companies are strengthening their due diligence systems and taking care with their suppliers to ensure they are not the next ones to feel Lacey’s bite.

 

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