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$13 Million Penalty for Illegal Hardwood Imports

Tuesday, February 02, 2016
Sandler, Travis & Rosenberg Trade Report

The Department of Justice announced Feb. 1 that a hardwood flooring retailer will pay $13.15 million in penalties for illegal imports of hardwood flooring, one of the largest penalties ever under the Lacey Act. This total includes $7.8 million in criminal fines, $969,175 in criminal forfeiture and more than $1.23 million in community service payments. The company has also agreed to a five-year term of organizational probation, mandatory implementation of a government-approved environmental compliance plan and independent audits, and a related civil forfeiture of more than $3.15 million. 

The company had previously pleaded guilty to one felony count of importing goods through false statements and four misdemeanor violations of the Lacey Act, which makes it a crime to import timber taken in violation of the laws of a foreign country and to transport falsely-labeled timber across international borders into the U.S. According to a joint statement of facts filed with the court, from 2010 to 2013 the company repeatedly failed to follow its own internal procedures and failed to take action on self-identified red flags that included imports from high risk-countries, imports of high-risk species, imports from suppliers that were unable to provide documentation of legal harvest, and imports from suppliers that provided false information about their products. For example, company employees were aware that timber from the Russian Far East was considered to carry a high risk of being illegally sourced due to corruption and illegal harvesting, yet the company increased its purchases from Chinese manufacturers using timber sourced in the Russian Far East. On other occasions the company falsely reported the species or harvest country of timber when it was imported into the U.S.

One project that will be funded from the community service payments is the development of a wood identification device that would be able to identify timber species listed on the appendices of the Convention on International Trade in Endangered Species of Wild Fauna and Flora. The DOJ notes that if U.S. border officials had had access to such a device previously the company at issue “could have been flagged for violation years ago, thus averting the flow of money back to China and Far East Russia in support of illegal logging.”

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