Lumber Liquidators CEO Robert Lynch unexpectedly resigned Thursday following weeks of struggles over safety concerns related to its flooring products.
The Toano, Va.-based company will search nationally for a replacement, the company said. Thomas Sullivan, Lumber Liquidators founder, will serve as acting CEO, USA Today reports. Lynch also stepped down from the board of directors. John Presley, its lead independent director, will be non-executive chairman of the board effective immediately. CFO Dan Terrell will leave the company in June.
The company’s turmoil began with a report on 60 Minutes in March alleging high levels of formaldehyde in Lumber Liquidators laminate flooring products imported from China. Shortly after the report, the Consumer Product Safety Commission (CPSC) announced that it is investigating the company for the use of formaldehyde in its products. The company has also acknowledged that it faces criminal federal charges over imported bamboo illegally sourced from protected animal habitats. Lumber Liquidators also faces lawsuits from activist groups, according to USA Today.
Formaldehyde, which is often found in industrial products, is considered a carcinogen at high levels of exposure. Regulations limit the amount of formaldehyde used in consumer products. 60 Minutes reported that three of Lumber Liquidators’ Chinese suppliers falsely labeled their products as complying with California exposure limits. Lumber Liquidators suspended sales of all laminate flooring from China pending completion of an internal review, USA Today reports. The review will be handled by Freeh Group International Solutions, the investigative company founded by former FBI director Louis Freeh.
Earlier this month, Lumber Liquidators said tests conducted by “independent, accredited laboratories” found that “over 97% of customers’ homes were within the protective guidelines established by the World Health Organization for formaldehyde levels in indoor air.” The company sent about 26,000 testing kits to nearly 15,000 customers. About 3,400 kits that were returned and those were tested. But a California attorney representing a couple who recently filed a lawsuit against the company, said the n a test results given to his clients were “false and deceptive,” according to CBS News.
The National Cancer Institute says that formaldehyde in the air at levels exceeding 0.1 ppm, can cause adverse effects including watery eyes; burning sensations in the eyes, nose, and throat; coughing; wheezing; nausea; and skin irritation. In 1987, the U.S. Environmental Protection Agency (EPA) classified formaldehyde as a probable human carcinogen under high or prolonged exposure. The International Agency for Research on Cancer, an arm of the World Health Organization, classifies formaldehyde as a known human carcinogen and the Environmental Protection Agency (EPA) classifies it a probable human carcinogen. In the 12th Report on Carcinogens, the National Toxicology Program listed formaldehyde as a known human carcinogen. Research on workers exposed to formaldehyde reveals a potential tie between formaldehyde exposures and cancers such as leukemia and nasopharyngeal cancer.
In its annual February, filed in February, the company revealed that federal law enforcement officials raided its offices in the fall of 2013 searching for documentation related to import practices, USA Today reports. The Justice Department is seeking criminal charges for alleged violation of the Lacey Act, which prohibits trading goods derived from wildlife, fish and plants that were illegally transported or sold.