Lumber Liquidators compliance chief quits

New York – Top management continues to leave Lumber Liquidators Holdings Inc. in the wake of accusations the retailer sold Chinese hardwood laminate products that had illegal levels of formaldehyde. Ray Cotton, chief compliance officer of Lumber Liquidators, has resigned from the company.



No formal announcement has been made, but multiple media reports indicate Cotton is no longer in his position. In addition, Cotton’s LinkedIn profile lists Lumber Liquidators as a part employer, with his position as senior VP and chief compliance officer running from September 2014 to May 2015.



Robert Lynch, former CEO of Lumber Liquidators, resigned in May 2015 with the retailer making a brief public announcement of his departure.



The Justice Department seeks to file criminal charges against Lumber Liquidators following an investigation was first revealed in a CBS “60 Minutes” expose in early March, alleging that the company’s laminate flooring made in China contained high levels of formaldehyde. Lumber Liquidators maintains that it complies with applicable regulations for its products, including California standards for formaldehyde emissions. It has sent thousands of free air testing kits to customers who bought the flooring and says that 97% of the products tested fell within World Health Organization standards for formaldehyde.



At least for the time being, Lumber Liquidators is not sourcing flooring products from China. Lumber Liquidators recently reported a first-quarter loss of $7.8 million, swinging from a profit of $13.7 million in the year-ago period and missing Wall Street expectations. The company is also facing hundreds of class-action lawsuits. CFO Dan Terrell previously announced he would step down this month.