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$10 Million Penalty for Lacey Act Violations Concerning Lumber Imports

Tuesday, October 13, 2015
Sandler, Travis & Rosenberg Trade Report

A Virginia-based lumber company announced Oct. 7 that it has agreed to pay $10 million in penalties in connection with imports of timber that violated the Lacey Act. This amount includes a $7.8 million fine, contributions of $880,825 to the National Fish and Wildlife Foundation and $350,000 to the Rhinoceros and Tiger Conservation Fund, and a $969,175 forfeiture payment. The company has also agreed to implement a plan to ensure future compliance with the Lacey Act that a company official said represents an investment of “significant time and resources to strengthen our quality assurance procedures, from enhanced protocols designed to verify licensing, certification and regulatory compliance as well as product sample testing.”

According to a company press release, the company agreed to plead guilty to four misdemeanor due-care violations of the Lacey Act and a single felony charge for entry of goods by means of false statements. This concludes a Department of Justice inquiry launched in 2013 that primarily related to certain foreign suppliers harvesting more timber than their permits allowed in foreign jurisdictions and the company's importation of flooring products made from this timber. This matter focused on some of the company’s hardwood flooring purchase orders and import declarations made concerning the origin of the timber of those orders.

In addition, as previously disclosed, the company determined in the second quarter of 2015 that there were Lacey Act compliance concerns related to a limited amount of its engineered hardwood flooring. The company suspended sales of approximately $4.1 million of this product and after investigation determined that there were no compliance concerns with respect to approximately $0.9 million worth. The company has now reached a settlement with the DOJ concerning the remainder in which the department will accept a $3.2 million payment in lieu of civil forfeiture and the company will be permitted to sell the suspended flooring and retain any sale proceeds.

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