A spokesman for the U.S. Attorney’s Office declined comment on its subpoenas.
Mohawk reported it generated nearly $10 billion in revenue last year. The company employed nearly 42,000 people in 2019, about half of them in the United States. It is the biggest player in a broader flooring industry that has long been a major employer and financial engine in north Georgia.
Yet years before the coronavirus pandemic sent shudders through the industry, Mohawk was faltering.
There was a boom in the overall market for luxury vinyl tile, which is made to look like hardwood or some other kinds of conventional flooring. Mohawk didn’t have strong footing, so it bought a Belgian manufacturer that made luxury vinyl tile and had a plant in north Georgia.
Mohawk trumpeted steep financial gains and brisk sales. But, according to the later lawsuit, the company was inflating results even as a huge chunk of the vinyl coming out of the company’s operations was defective. The suit claims senior executives were given reports showing the results of the roller coaster of deliveries near the end of financial quarters followed by returns the next financial period.
Competitors were gaining on Mohawk in the new segment even as the company’s more conventional flooring sales slowed, according to the suit. It accused the company of issuing false and misleading financial statements to investors from early 2017 into last year.