Arts-and-crafts chain Hobby Lobby has agreed to hand over thousands of illicit Iraqi artifacts and pay $3 million to settle a civil forfeiture action brought by the Department of Justice, federal prosecutors announced Wednesday.

The crafts retailer began to collect “historically significant manuscripts, antiquities and other cultural materials” around 2009, according to prosecutors.

In October 2010, a lawyer warned Hobby Lobby that “the acquisition of cultural property likely from Iraq, including cuneiform tablets and cylinder seals, carries a risk that such objects may have been looted from archaeological sites in Iraq,” the feds said.

But just a couple months later, Hobby Lobby agreed to buy over 5,500 ancient artifacts, including cuneiform tablets, clay bullae and cylinder seals, for $1.6 million — even though the purchase was “fraught with red flags.”

The packages were sent to three corporate addresses in Oklahoma City with misleading shipping labels that described them as “ceramic tiles” or “clay tiles (sample),” the feds said.

According to the U.S. Attorney’s Office, the items were from the area of modern-day Iraq and had been smuggled into the country through the United Arab Emirates and Israel.

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The Justice Department filed a civil complaint against Hobby Lobby on Wednesday, prompting the company to agree it will forfeit the artifacts and pay $3 million.

“American collectors and importers must ensure compliance with laws and regulations that require truthful declarations to U.S. Customs and Border Protection, so that Customs officers are able to scrutinize cultural property crossing our borders and prevent the inappropriate entry of such property,” Acting United States Attorney Rohde said in a statement.

“If they do not, and shippers use false declarations to try to clandestinely enter property into the United States, this Office and our law enforcement partners will discover the deceit and seize the property.”

This report originally appeared on NYPost.com.