Flooring retail giant Lumber Liquidators Holdings Inc. has agreed to pay a total penalty of $33 million for making fraudulent misstatements to investors regarding the sale of laminate flooring made in China that had unsafe formaldehyde levels.

The Toano-based specialty retailer, which is moving its headquarters to Henrico County, agreed to pay a criminal fine of $19.1 million and $13.9 million in forfeiture in a settlement announced Tuesday with the U.S. Attorney's Office, the Department of Justice and the Securities and Exchange Commission.

“This penalty should serve as a warning to other corporations who seek to mislead investors,” David W. Archey, special agent in charge of the FBI’s Richmond field office, said in a statement.

The case primarily focused on Lumber Liquidators knowingly making a false and misleading statement to investors broadly denying the allegations in the CBS news program “60 Minutes” that ran a segment in March 2015 reporting that Lumber Liquidators sold flooring made in China that had unsafe formaldehyde levels, which could increase cancer risks.

The company's regulatory filing the day after the episode ran affirmed that the company complied with California Air Resources Board regulations, which was not true.

“Lumber Liquidators lied to investors and to the public about its compliance with formaldehyde regulations for the flooring it sold—all to protect its stock price,” Brian A. Benczkowski, assistant Attorney General of the Justice Department’s criminal division, said in a statement.

“False and misleading financial reports undermine the integrity of our securities markets and harm investors," he said. "The department and our law enforcement partners are committed to doing everything we can to ensure that those who commit securities fraud are held accountable.”

G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia, said the settlement with Lumber Liquidators recognizes that the company has cooperated with the government's investigation and it has replaced its senior executive team.

The company stopped selling laminate flooring from China in May 2015. Federal officials said all employees involved in the fraud have either been terminated or resigned.

"We appreciate that the government recognizes the changes in the company's leadership and the strengthened organization that we have built," said Dennis Knowles, who became the chief executive officer at Lumber Liquidators in late 2016. He joined the company as chief operating officer in March 2016 - a year after the "60 Minutes" report.

"Lumber Liquidators has undergone a significant transformation in recent years and today is a new company led by an entirely new management team that is committed to our customers, compliance, transparency, and accountability across our organization," Knowles said in the statement.

Lumber Liquidators entered into what the government calls a deferred prosecution agreement in charging the company with securities fraud. Under the agreement, prosecution of the company for securities fraud will be deferred for three years to allow Lumber Liquidators to demonstrate good conduct.

As a result, Lumber Liquidators has agreed to pay a fine in the amount of $19.1 million and restitution of $13.9 million, of which up to $6.1 million will be paid to the SEC in disgorgement and prejudgment interest. The amount represents the company’s net profits from the sale of 100 percent of its Chinese laminate from January 2015 through May 7, 2015.

Lumber Liquidators also agreed to implement rigorous internal controls and cooperate fully with the Justice Department’s ongoing investigation, including its investigation of individuals.

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