A report by the television news program60 Minutesclaims samples of Chinese-made laminate flooring sold by Lumber Liquidators contained six or seven times as much formaldehyde as permitted by California regulations and may pose a health threat to unsuspecting homeowners.

In a program that was broadcast on March 1, correspondent Anderson Cooper was told that the problem affected tens of thousands of households in California and hundreds of thousands around the country.

Cooper said that Lumber Liquidators, a national chain with more than 360 stores in 46 states, sells 100 million square feet of laminate flooring a year, much of it made in China.

The flooring, “as we discovered during our investigation,” he said, “may fail to meet health and safety standards because it contains high levels of formaldehyde, a known cancer causing chemical.”

The company says that its flooring is safe, he adds, “but it doesn’t appear that way.”

Samples purchased and tested by outside labs

Anderson spoke with Denny Larson, identified as the executive director of a nonprofit calledGlobal Community Monitor. Larson said that he and environmental attorney Richard Drury bought 150 boxes of laminate flooring around the state and had them tested by three labs.

“The results? While laminate flooring from Home Depot and Lowe’s had acceptable levels of formaldehyde, as did Lumber Liquidators American-made laminates, every single sample of Chinese-made laminate flooring from Lumber Liquidators failed to meet California formaldehyde emissions standards,” the report said. “Many by a large margin.”

On average, the flooring samples from Lumber Liquidators outlets had six or seven times as much formaldehyde as state standards allowed, but some showed levels 20 times as high as permitted. One of the labs, Drury said, was so startled by the results that technicians “thought their machine was broken.”

Problem extends beyond California

60 Minuteswondered whether the problem extended beyond California, Cooper reported, so producers purchased 31 boxes of Lumber Liquidators Chinese-made laminate flooring at stores in Virginia, Florida, Texas, Illinois and New York.

“We sent the samples for testing at two certified labs,” he said. “It turns out of the 31 samples of Chinese-made laminate flooring, only one was compliant with formaldehyde emissions standards. Some were more than 13x over the California limit. Both labs told us they had never seen formaldehyde levels that high.

“But when we took those test results to Lumber Liquidators’ founder and chairman Tom Sullivan, he refused to accept the methodology as valid and points out the company is not required by law to test their finished products like we did.”

When interviewed, Sullivan said the lab tests were “not a real world test of the laminate,” and said the tests were originally prompted by a group of lawyers who are suing the company and short-selling the stock (that is, betting the stock’s value will decline).

The company’s stock rose from $13 a share in 2011 to $119 a share two years later as profit margins doubled, the report said, leading one hedge fund manager60 Minutesinterviewed to suspect it might be breaking the law. Whitney Tilson told Cooper he had been tipped that Lumber Liquidators was buying formaldehyde tainted flooring in China because it was cheaper and allowed a fatter profit margin.

A60 Minutesundercover trip to Chinese factoring making the flooring confirmed Tilson’s claims, Cooper said.