In response to the allegation, Lumber Liquidators strongly denied the allegation in its Form 8-K filing with the SEC. The company told investors that its flooring products complied with formaldehyde emissions standards based on third-party test results. It omitted material facts regarding the investigation into its flooring products by the California Air Resources Board (CARB). Additionally, the company told investors that it stopped sourcing materials from suppliers that failed to meet standards.
According to the DOJ and SEC, the company’s response to the allegation was false since it knew that its largest Chinese supplier failed third-party formaldehyde emissions testing. It was unable to provide documentation showing regulatory compliance.
In a statement, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, said, “Lumber Liquidators lied to investors and to the public about its compliance with formaldehyde regulations for the flooring it sold – all to protect its stock price.”
