Lumber Liquidators to Pay $33 Million in Fraud Case
A popular home flooring retailer is paying big bucks to get out of a securities fraud case for misleading investors about the company’s use of potentially harmful products from China.
Lumber Liquidators has agreed to fork over $33 million to settle claims it didn’t make investors aware that the company was selling Chinese flooring heavy in formaldehyde. The colorless gas is common in many building materials, but the flooring products had included enough formaldehyde to put people at risk of cancer and cause respiratory problems, according to prosecutors.
“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,” Assistant Attorney General Brian Benczkowski said in a Justice Department statement announcing the settlement. “False and misleading financial reports undermine the integrity of our securities markets and harm investors.”
The health concerns were exposed in a CBS 60 Minutes episode, in which investigators found what they called extremely high levels of formaldehyde in certain Lumber Liquidators laminate flooring products from China. Prosecutors said the company denied the allegations and continued to use the same suppliers, lying to investors along the way.
Lumber Liquidators has already agreed to pay some $36 million to hundreds of thousands of customers who purchased laminate flooring over a six-year period. It also paid $2.5 million to state regulators in California.
“While we will continue to improve our compliance processes, having these matters behind us allows us more resources to focus on our customers, great product lines, and our strategic vision,” Lumber Liquidators Chief Executive Officer Dennis Knowles said in a press release following the settlement.
How Our Investment Fraud Attorneys Can Help You
If you or a loved one has been victimized by securities fraud, it’s important you have the right to seek compensation from those responsible. An experienced investment fraud attorney can help you explore your rights and options.
That includes potentially starting or joining a securities class action lawsuit, which is an efficient way for fraud victims to join together to seek legal remedies. These lawsuits are typically brought by one or a small group of people, seeking to sue on behalf of a wide range of investors who have all been defrauded. They allow fraud victims to leverage their claims and share the burden of bringing the suit. Class members who want to be directly involved can do so by requesting to be named a class representative.
At Glancy Prongay & Murray, our investment fraud attorneys have been representing people in securities fraud and other similar cases for more than two and a half decades. We have a strong track record of success in these cases. Call us at (310) 201-9150 or contact us online to speak with an attorney today.