Who gains from saving nature
Ledger 1 : 33 — For each dollar financing nature-based solutions in 2023, about $33 financed activities harmful to nature. (UNEP)
Cases / Law, regulation and treaties · Russia · 2010–2024

Lumber Liquidators Lacey Act guilty plea over Russian Far East oak flooring

Nature's voice · report
One concession in my Khabarovsk forests held a permit for 373 m3 of Mongolian oak; 2,494.80 m3 were shipped from it in 2013, according to the statement of facts.
Did nature suffer? Yes. Harm is on record. Disputed
Recorded
What the record lacks: 2 none on record · 2 not disclosed · 1 not measured · 6 disputed · 1 unclear See the gaps
Accounts of the harm differ
Number of Amur leopards remaining in the wild
Volume shipped under the Count Four concession

In October 2015 Lumber Liquidators pleaded guilty in a US federal court to a felony and four misdemeanor Lacey Act counts over hardwood flooring made in China from timber harvested in the Russian Far East. The plea agreement totalled US$13.15 million, including US$1,230,825 in payments to conservation funds.

US$13.15 millionTotal under the plea agreement (DOJ)
DOJ figure: US$7.8 million criminal fine, US$969,175 criminal forfeiture, more than US$1.23 million community service payments and more than US$3.15 million through a related civil forfeiture.

Status As of August 2024: sentence imposed 1 February 2016; the company, renamed LL Flooring, filed for Chapter 11 protection in Delaware.

What?
Lumber Liquidators pleaded guilty in October 2015 to a felony and four misdemeanor Lacey Act counts over hardwood flooring made in China from Russian Far East timber, and in February 2016 was sentenced to a US$7.8 million fine, forfeitures, community service payments and five years of probation. US Department of Justice
Where?
Harvest in Khabarovsk Province (Khabarovsk Krai), Russian Far East; processing in China (EIA traced wood to Suifenhe); court in Norfolk, Virginia. US District Court, Eastern District of Virginia (via SEC EDGAR)
When?
Conduct 2010–2013; plea agreement 7 October 2015; guilty plea 22 October 2015; sentence 1 February 2016. US District Court, Eastern District of Virginia (via SEC EDGAR)
Who?
Gained
Lost
  • Lumber Liquidators — US$13.15 million under the plea agreement (DOJ), plus probation and audits US Department of Justice
Harmed
Why?
The statement of facts says the company failed to follow its own procedures and to act on red flags while increasing purchases from Chinese manufacturers using Russian Far East timber. US Department of Justice
How?
Mongolian oak was imported under false species and origin declarations and from a concession whose permit was exceeded; the plea resolved one count under 18 U.S.C. § 542 and four under the Lacey Act. US District Court, Eastern District of Virginia (via SEC EDGAR)
6 of 6 questions answered from the record

What happened

The record, in order.

On 22 October 2015 Lumber Liquidators, Inc. pleaded guilty in the US District Court for the Eastern District of Virginia (Norfolk) to one felony count of entering goods by false statements and four misdemeanor Lacey Act counts. The plea agreement was signed on 7 October 2015. The US Department of Justice (DOJ) described the case as the first felony conviction related to the import or use of illegal timber and the largest criminal fine ever under the Lacey Act. The investigation was run jointly by the US Fish and Wildlife Service (USFWS) and ICE Homeland Security Investigations as "Operation Oakenshield".

The joint statement of facts, as summarised by DOJ, said that from 2010 to 2013 the company repeatedly failed to follow its own internal procedures and failed to act on self-identified "red flags", although employees knew Russian Far East timber was considered high-risk. The counts cover shipments from 1 October 2011 to 23 September 2013. Count Four concerned Mongolian oak from a concession in Khabarovsk Province: the permit allowed 373 m3, Russian forestry experts estimated about 300 m3 as the commercial maximum, and shipments under that permit came to 2,494.80 m3, which the statement called about 800% of the allowable harvest. Other counts concerned oak declared as Welsh oak or as "Mongolian oak harvested in Germany" (the statement says neither occurs where declared) and Myanmar timber declared as Indonesian mahogany.

The company was sentenced on 1 February 2016. The terms were a US$7.8 million criminal fine (against a stipulated gross gain of US$4.6 million), US$969,175 in criminal forfeiture, a related civil forfeiture of more than US$3.15 million in cash, five years of organisational probation, a government-approved environmental compliance plan and three third-party audits. Community service payments of US$1,230,825 went to the National Fish and Wildlife Foundation (US$880,825, of which US$500,000 for timber identification technology and US$380,825 for Amur leopard conservation) and to the USFWS Rhinoceros and Tiger Conservation Fund (US$350,000). No restitution was ordered.

The Environmental Investigation Agency (EIA) published "Liquidating the Forests" on 9 October 2013, linking Lumber Liquidators to a Chinese manufacturer, Suifenhe Xingjia Group, and to timber from the Russian Far East; the EIA said a federal investigation opened in September 2013. The company said in 2014 that the EIA report contained fundamental inaccuracies. EIA also reported that in December 2014 a Russian court found senior executives of a Russian logging company, Beryozoviy LLC, guilty on 15 counts of illegal logging and participation in a criminal network, and described that company as a supplier of Xingjia.

On 13 August 2024 a news report said LL Flooring, formerly Lumber Liquidators, had filed for Chapter 11 protection in Delaware and announced 94 store closures.

  1. 2010Start of the conduct period described in the statement of facts (2010–2013)
  2. 2013EIA publishes "Liquidating the Forests" (9 Oct); EIA says the federal investigation opened in September
  3. 2014Company disputes the EIA report (EIA account of 3 Oct); a Russian court convicts Beryozoviy LLC executives (Dec, per EIA)
  4. 2015Plea agreement signed (7 Oct); guilty plea entered in Norfolk (22 Oct)
  5. 2016Sentencing in the Eastern District of Virginia (1 Feb)
  6. 2024LL Flooring files for Chapter 11 in Delaware (reported 13 Aug)

What was said

Claims, in the words of those who made them.

“the first felony conviction related to the import or use of illegal timber and the largest criminal fine ever under the Lacey Act”

“Lumber Liquidators' race to profit resulted in the plundering of forests and wildlife habitat that, if continued, could spell the end of the Siberian tiger.”

“This company left a trail of corrupt transactions and habitat destruction.”

“Lumber Liquidators made American consumers unwittingly complicit in the ongoing destruction of some of the world's last remaining intact forests.”

“Lumber Liquidators, Inc. admits guilt for the offenses that are the subject of this criminal proceeding.”

“does not stipulate that it took any illegal conduct with a deliberate or willful intent”

“We are pleased to reach this agreement and resolve a legacy issue related to the Lacey Act.”

John Presley, chairman, Lumber Liquidators · 8 October 2015 · CBS58

“The real cost to the company will come from having to forego cheap, stolen wood.”

Kate Horner, EIA · October 2015 · Mongabay

Where accounts differ

Each party's account, side by side, with its source. The record does not settle these points; it shows them.

Intent: the company admitted guilt but did not stipulate deliberate or willful intent
Government and regulators
DOJ and USFWS

Their statements used the word "knowingly" in describing the conduct.

US Department of Justice
Company or project
Lumber Liquidators

Admitted guilt for the offenses; did not stipulate that it took any illegal conduct with a deliberate or willful intent; on Counts Four and Five "LL failed to exercise due care".

US District Court, Eastern District of Virginia (via SEC EDGAR)
What the company knew about the origin of the wood before the charges
Communities and civil society
EIA

Claimed company managers toured the Chinese manufacturer's operations and knew the wood was illegal; the claims rest on EIA's undercover recordings.

Environmental Investigation Agency
Company or project
Lumber Liquidators

Said in 2014 the EIA report contained fundamental inaccuracies and unsubstantiated claims, and cited a rigorous compliance program.

Environmental Investigation Agency
Courts
Statement of facts

Names the suppliers only as Company X, Company Y and Company Z.

US District Court, Eastern District of Virginia (via SEC EDGAR)
Number of Amur leopards remaining in the wild
Government and regulators
DOJ plea release

Fewer than 50 remain in the wild.

US Department of Justice
Courts
Statement of facts

An estimated 57 Amur leopards remaining in the wild.

US District Court, Eastern District of Virginia (via SEC EDGAR)
Volume shipped under the Count Four concession
Courts
Statement of facts, narrative

2,494.80 m3 (1,491,336 ft2) shipped under the one permit.

US District Court, Eastern District of Virginia (via SEC EDGAR)
Courts
Statement of facts, count table

2,559.6 m3 (1,530,072 ft2) for Count Four's 79 shipments.

US District Court, Eastern District of Virginia (via SEC EDGAR)

How it looked

What was shown, beside what was recorded.

Shown

  • Before the charges the company said the EIA report "contained fundamental inaccuracies and unsubstantiated claims" and cited a "rigorous compliance program".
    Lumber Liquidators, as quoted by EIA (3 October 2014) · Environmental Investigation Agency
  • Asked by Global News whether it sold illegal Russian Far East wood, the company answered "No."
    Lumber Liquidators, written answer as reported by EIA (3 October 2014) · Environmental Investigation Agency
  • Press reported a "$10 million" settlement on 8 October 2015; this figure excluded the civil forfeiture.
    CBS58 (8 October 2015) · CBS58

Recorded

Who gained

Money that reached nature, beside money that stayed elsewhere.

Reached nature or the ground

—
Community service payment: National Fish and Wildlife Foundation (US$500,000 for timber identification technology; US$380,825 for Amur leopard conservation)$0.88m
Community service payment: USFWS Rhinoceros and Tiger Conservation Fund (wild tiger research and conservation)$0.35m

Gained elsewhere

Not totalled
Criminal fine (directed to the Lacey Act Reward Fund)$7.8m
Criminal forfeiture (Mongolian oak flooring imported February–August 2013)$0.97m
Civil forfeiture (United States v. $3,155,000.00 Res; DOJ: more than US$3.15 million in cash)$3.15m
Stipulated gross gain used for the fine$4.6m
Reached the ground
—
Currency: USD · Window: 2015–2016. All figures cover the same period. * Estimate built from cited figures.

Responses on record

  • lumber-liquidators (7 October 2015): Admitted guilt for the offenses in the plea agreement; did not stipulate deliberate or willful intent; on Counts Four and Five stated it failed to exercise due care. · US District Court, Eastern District of Virginia (via SEC EDGAR)
  • lumber-liquidators (8 October 2015): Chairman John Presley said the company was pleased to reach the agreement and resolve a legacy issue related to the Lacey Act. · CBS58
  • lumber-liquidators (3 October 2014): Before the charges the company said the EIA report contained fundamental inaccuracies and unsubstantiated claims and answered "No" when asked whether it sold illegal Russian Far East wood (as reported by EIA). · Environmental Investigation Agency

In court and with insurers

Every proceeding and every insurer decision on record.

Lawsuits and rulings

  1. 2015–2016Guilty plea$7.8m criminal fine
    United States v. Lumber Liquidators, Inc.
    US District Court, Eastern District of Virginia (Norfolk) · Criminal · United States (DOJ) → Lumber Liquidators, Inc.

    Guilty plea entered 22 October 2015 to one felony count of entering goods by false statements (18 U.S.C. § 542) and four misdemeanor Lacey Act counts; sentenced 1 February 2016 to the US$7.8 million fine, US$969,175 criminal forfeiture, US$1,230,825 in community service payments, five years of organisational probation, a compliance plan and three audits. No restitution. US Department of Justice

  2. Outcome not on record$3.15m res
    United States v. $3,155,000.00 Res (civil forfeiture)
    US District Court, Eastern District of Virginia · Civil · United States → Birch and oak flooring (in rem), US$3,155,000.00

    Companion in rem case covering 2,129,242 sq ft of birch and 242,717 sq ft of oak flooring; DOJ counted more than US$3.15 million in cash through the related civil forfeiture within the US$13.15 million total. US District Court, Eastern District of Virginia (via SEC EDGAR)

  3. 2014Claimant wonRUB 66m damage (EIA gives about US$2 million)
    Criminal case against Beryozoviy LLC executives
    Russian court (not named in the source) · Criminal · Russian prosecutors → Senior executives of Beryozoviy LLC (not named in the source)

    EIA reported that in December 2014 the executives were found guilty on 15 counts of illegal logging (2010–2012) and participation in a criminal network; the director of the group was sentenced to 15 years in a penal colony. Volumes: over 1,500 m3, including 327 m3 of hardwoods from Khoso Natural Park; the concession lay about 200 km north of Khabarovsk. EIA describes the company as a supplier of the Chinese manufacturer Xingjia. Environmental Investigation Agency

Insurers

No insurer decision on record.

What nature saw

Outcomes measured on the ground, and nature's note.

Nature's report opens this page. Below: further outcomes measured on the ground.

Permit against shipments
373 m3 vs 2,494.80 m3
Mongolian oak, one Khabarovsk concession permit (statement of facts)
Paid to conservation funds
US$1,230,825
National Fish and Wildlife Foundation and USFWS Rhinoceros and Tiger Conservation Fund
Wild Siberian tigers cited
450
DOJ: "the last 450 wild Siberian tigers"
Amur leopards cited
fewer than 50 / 57
DOJ release against the statement of facts

What we don't know

Undisclosed, unproven, untried: recorded as data.
Court ruling exists

Nature

  • Disputed Number of Amur leopards remaining in the wild
  • Disputed Volume shipped under the Count Four concession

Court

  • Unclear United States v. $3,155,000.00 Res (civil forfeiture): outcome not on record.

Accounts

  • Disputed Intent: the company admitted guilt but did not stipulate deliberate or willful intent
  • Disputed What the company knew about the origin of the wood before the charges

Record

  • Disputed Figures differ: the statement of facts gives 2,494.80 m3 (1,491,336 ft2) shipped under the one concession permit and 2,559.6 m3 (1,530,072 ft2) for the 79 Count Four shipments.
  • Disputed Figures differ: DOJ's release gives fewer than 50 Amur leopards in the wild; the statement of facts gives 57.
  • Not measured Not measured: habitat loss attributable to these shipments.
  • Not disclosed Not disclosed: the Chinese suppliers and any Russian concession holder; the statement of facts refers to them as Company X, Company Y and Company Z.
  • None on record None on record: completion of the fine instalments, the community service payments or the audits.
  • Not disclosed Not disclosed: the court and the defendants in the Russian Beryozoviy LLC case; EIA's account does not name them.
  • None on record None on record: insurance relating to the fine or forfeitures.

Did the harm stop?

The conduct period was 2010–2013; the sentence required a government-approved compliance plan within three months and five years of probation with three audits.

Who paid?

Lumber Liquidators paid under the plea agreement: US$7.8 million fine, forfeitures and US$1,230,825 to conservation funds, US$13.15 million in total (DOJ). No restitution was ordered.

Sources

Voices on record: — Company or project✓ Government and regulators✓ Courts✓ Press and investigations✓ Communities and civil society— Researchers

Government and regulators

Courts

Press and investigations

Communities and civil society

  1. Liquidating the Forests (report page)
    Environmental Investigation Agency · 2013-10-09
  2. Lumber Liquidators importing illegal hardwood flooring
    Environmental Investigation Agency · 2013-10-09
  3. Lumber Liquidators lies to the public
    Environmental Investigation Agency · 2014-10-03
  4. Russian supplier to Lumber Liquidators convicted of organized crime
    Environmental Investigation Agency · 2015-01-28

Connected cases

Related matters, and cases linked to this one through the same organisations, with the role each played in both.
Terms used on this page

Bonds and banking

Delaware, Guernsey, Cayman Islands
Jurisdictions widely used to register companies, funds and accounts for legal, confidentiality and tax reasons.
Liquidation, insolvency, bankruptcy
Legal processes that apply when a company cannot pay its debts; its assets are sold and claims against it may go unpaid.

Law and courts

Plea
In a criminal case, the defendant's formal answer to a charge. A plea agreement settles a case with a guilty plea on agreed terms.

Institutions

SEC
The US Securities and Exchange Commission, which regulates securities markets and what companies tell investors.
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