Lumber Liquidators CEO makes surprising admission
Lumber Liquidators stock rebounded Thursday after CEO Rob Lynch defended the company and its products to investors -- but he also made a surprising admission.
When "60 Minutes" sent investigators undercover at three Chinese factories that produce laminate flooring for Lumber Liquidators, it exposed excessive levels of the cancer-causing chemical formaldehyde in the glue used to bind wood particles that make up the core of the laminated boards.
At the time, company founder Tom Sullivan told Anderson Cooper the flooring complied with strict standards set by the California Air Resources Board, also known as CARB.
"We're never gonna sell something unsafe," Sullivan said.
Employees at the factory told "60 Minutes" a different story.
"I have to be honest with you. It's not CARB 2," a factory's general manager told investigators in a hidden camera recording, meaning it didn't meet the CARB safety standards.
On a conference call with investors Thursday, Lumber Liquidators CEO Rob Lynch admitted CARB'S preliminary tests had revealed high levels of formaldehyde before the "60 Minutes" broadcast.
"We know that tests on some deconstructed samples have had elevated levels, but we believe that the results of deconstructed tests have little or no bearing on the safety of the finished product," Lynch said.
Lumber Liquidators doesn't believe in the testing method CARB developed and uses, which peels back the top layers of the board in order to analyze the core.
"We have been engaged with CARB over many months, provided them with additional information and, like others in the industry, have expressed our concerns on the validity and applicability of the deconstructive testing method," Lynch said.
In tests commissioned by "60 Minutes," 30 of 31 boxes of the product labeled compliant were not, with some emitting as much as 13 times the CARB 2 limit.
"Kinda disgusted really, with what's going on, that they knew about the product," said Michael Balero, the lead plaintiff in a class-action suit against Lumber Liquidators.
Balero is ripping out the laminate floor in his home.
"They just can't sell this product and get away with it," Balero said.
Lumber Liquidators is still selling the Chinese laminate flooring but is now offering concerned customers independent tests of the air quality in their homes.
If high levels of formaldehyde are detected from the flooring, the company says it will consider replacing it at no cost.