Four recent False Claim Act (FCA) cases arising out of customs fraud allegations illustrate the announced enforcement priorities of the Department of Justice (DOJ), including prosecuting trade and customs fraud and tariff evasion under a variety of laws. The U.S. government capped this recent run of trade fraud enforcement proceedings with the announcement of a DOJ and Department of Homeland Security (DHS) trade fraud task force.
On August 19, July 23, and July 24, 2025, the DOJ announced the resolution of three FCA cases that highlight its focus on “[t]rade and customs fraud.” Additionally, on July 15, 2025, the DOJ intervened in an FCA case in South Carolina arising out of allegedly falsified valuations of imported goods to evade tariffs. In connection with one of the settlements, Assistant Attorney General Brett A. Shumate observed, “The Department will pursue those who gain an unfair trade advantage in U.S. markets, including those who knowingly evade or underpay duties owed on foreign imports.”
On August 29, 2025, the DOJ announced a DOJ-DHS task force focused on “identify[ing] and combat[ting] trade fraud that threatens [U.S.] economic and national security interests.” In the announcement, Deputy Assistant Attorney General Brenna Jenny highlighted the recent enforcement cases. “Since March of this year, the Commercial Litigation Branch has reached civil settlements to resolve allegations of improperly evaded customs duties across a wide range of products…. We look forward to enhanced coordination and information sharing with our law enforcement colleagues….”
Based on this enforcement focus, companies are well served by: evaluating the efficacy of trade, customs, and tariff compliance programs; conducting diligence on supply chains; investigating allegations of noncompliance; and considering self-disclosure when a violation has been identified.
The DOJ Prioritizes Trade and Tariff Fraud
On May 12, 2025, the DOJ announced new enforcement priorities and policies for prosecuting corporations and white-collar offenses against companies and individuals in its guidance, titled, “Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime.” (Our colleagues Seth Orkand and Julianna Charpentier analyzed these corporate enforcement priorities.) The guidance identifies two harms of trade and customs fraud. First, such fraud undermines protections for American consumers. Second, trade fraud hinders the government’s job-creation and investment agenda because it reduces costs on imported goods and tilts the playing field. For these reasons, the DOJ prioritized the investigation and prosecution of “[t]rade and customs fraud, including tariff evasion.” Prioritizing customs-related fraud within the DOJ’s Criminal Division represents a significant shift. Historically, customs related fraud has been investigated and litigated by the U.S. Customs and Border Protection (CBP) and the DOJ’s Civil Division. In addition, the DOJ also expanded the Corporate Whistleblower Pilot Program (discussed here) to include “[t]rade, tariff, and customs fraud by corporations” so that it could financially incentivize whistleblowers and promote lead generation regarding such alleged fraud.
False Declarations of Merchandise Descriptions to Avoid Antidumping and Countervailing Duties
On August 19, 2025, the DOJ announced the settlement of civil FCA claims against Allied Stone Inc., a Texas-based supplier of countertop and cabinetry products, as well as against Allied Stone’s president, to resolve allegations of conspiring to evade antidumping and countervailing duties (AD/CVD) imposed on products from the People’s Republic of China (PRC). The defendants agreed to pay a total of $12.4 million to resolve the allegations.
The government’s FCA claims arose in the context of an FCA whistleblower/qui tam lawsuit. A qui tam lawsuit is one brought by a private citizen (called the “relator”) on behalf of the government to recover money lost due to fraud against the government. The relator is typically a whistleblower who has knowledge of the alleged fraud, for example, an employee, customer, or competitor. If the lawsuit is successful, a qualifying whistleblower can receive a portion of the recovered funds. In this case, the relator was a former employee of an Allied affiliate.
The qui tam complaint alleged that the defendants misrepresented (or caused its PRC affiliates to misrepresent) PRC quartz products as other merchandise subject to lower duties, such as marble or crystallized glass, to avoid applicable AD/CVD. The Department of Commerce assesses, and CBP collects, AD/CVD to level the playing field for domestic producers. Antidumping duties protect against foreign companies “dumping” products on U.S. markets at prices below cost, while countervailing duties offset foreign government subsidies. The defendants also allegedly misrepresented (or caused its PRC affiliates to misrepresent) the country of origin of the merchandise.
The press release announcing the settlement does not reflect any credit for self-disclosure or cooperation.
The Allied Stone case gives additional context to the U.S. government’s priorities. First, the government is focused on enforcement with respect to certain countries of origin that are perceived as unfair trading partners that could harm U.S. economic or national security interests—e.g., the PRC. Second, the government intends to deliver on its promise of using more tools to enforce trade violations, which traditionally have not been significantly enforced through FCA litigation.
Another Case of False Descriptions to Evade AD/CVD
On July 24, the DOJ announced the settlement of civil FCA claims against Grosfillex Inc., a patio furniture company, arising out of the evasion of AD/CVD on items made of extruded aluminum originating from the PRC. Grosfillex agreed to pay $4.9 million to resolve the FCA claims. The FCA claims arose from an FCA whistleblower/qui tam lawsuit.
The settlement agreement reflects that Grosfillex submitted, and caused to be submitted, false customs forms to CBP claiming that certain furniture parts made of extruded aluminum were not subject to AD/CVD. For certain parts, the settlement agreement provides that Grosfillex attempted to camouflage the aluminum extrusions by packaging the parts as sham furniture “kits.” In addition, the settlement agreement states that Grosfillex knowingly failed to correct customs forms it had submitted previously for other parts, even after learning of the false statements.
In a qui tam action like this, opportunities for maximum voluntary self-disclosure (VSD), cooperation, and remediation credit are limited. (The press release reflects no such credit being granted to Grosfillex.) For example, to be eligible for VSD benefits, a company must be the first to initiate notification to the federal government of an apparent violation of law or regulation and meet other criteria. To sustain a qui tam action, the relator must base the suit on information not known by the U.S. government and provide a written disclosure—usually providing the complaint and other information supporting the allegations—to the U.S. government. As a result, a company defending a qui tam case generally cannot qualify as a first reporter under VSD programs because the realtor has already claimed that status through the relator’s submission to the government.
The Grosfillex case is a continuation of the themes in Allied Stone—the focus on country of origin and the use of the FCA. In addition, it highlights the government’s attention to punishing the failure to remediate—the penalties were higher than they otherwise would have been if Grosfillex had amended misstated filings when it learned of the misstatements.
Mislabeled Country of Origin Self-Disclosure and Settlement
On July 23, 2025, the DOJ announced a settlement of civil FCA claims against Global Plastics LLC and Marco Polo International LLC, both subsidiaries of MGI International LLC (MGI), arising from knowingly mislabeling the country of origin and the understating the value of certain plastic resins imported from the PRC. The companies agreed to pay $6.8 million, a civil penalty reduced because of the companies’ significant cooperation with the government, including a VSD as described below.
An importer must declare, among other things, the country of origin, value, applicability of duties, and amount of duties of goods being imported into the United States. CBP collects duties based on the information provided. Beginning in May 2019, Global Plastics and Marco Polo failed to declare the correct country of origin and value on certain imports of plastic resin products manufactured in the PRC and, as a result, failed to pay the proper duties owed to CBP.
In 2024, MGI and its subsidiaries self-disclosed the misconduct. MGI cooperated with the investigation by, among other things, making a timely VSD, conducting an internal investigation, preserving, collecting, and disclosing relevant facts and documents, conducting and sharing a damages analysis, and implementing remedial actions, including disciplining personnel and improving compliance procedures. As a result, the companies received credit under applicable VSD and cooperation guidance. In announcing this resolution, the U.S. government specifically acknowledged MGI’s responsible corporate behavior, manifested in its VSD, cooperation, and remediation, and reminded others that those who do not come to the government before it goes to them face more consequential sanctions.
The MGI case reinforces that, even in an area of heightened enforcement attention, significant benefits can be obtained through a VSD, cooperation, and remediation. Moreover, an effective compliance program to catch misconduct—either through monitoring/testing or a hotline report—can be critical to a company being able to position itself for these benefits and avoiding a qui tam FCA suit.
Falsification of Invoices to Reduce Tariffs
On July 15, 2025, the U.S. government filed an FCA intervenor complaint (United States ex rel. Joyce v. Global Office Furniture, LLC) in South Carolina alleging that Global Office Furniture submitted false invoices to CBP and thereby evaded at least $2 million in tariffs. The lawsuit is the culmination of a civil and criminal investigation commenced in March 2020 after the filing of an FCA whistleblower/qui tam suit.
The suit alleges that Global Office Furniture and an executive engaged in a scheme to reduce the declared value of goods to evade, initially, a 10% tariff and, later, a 25% tariff, on goods imported from the PRC. After failing to secure concessions from its distribution channel that would have shifted the entirety of the tariff burden to others, the company undertook a double-invoice scheme to evade the tariffs. The company created two separate invoices on each transaction, using an accurate invoice for payment between parties and an understated one (submitted to CBP) for calculation of tariffs owed to the U.S. government. The scheme reduced the tariffs the company owed by 50%.
In addition to the alleged violations of substantive trade law, the complaint asserts that the executive, after becoming aware of an investigation, engaged in activities to destroy evidence. The executive is alleged to have (i) directed employees to delete relevant emails, (ii) reviewed employees’ papers for potentially incriminating notes, and (iii) directed the implementation of a retroactive and prospective 60-day auto-delete function for company emails.
As a result, the U.S. government asserted claims for concealing or unlawfully avoiding or decreasing payment obligations, making false records or statements material to such payment obligations, and unjust enrichment.
Although the Global Office Furniture case is ongoing, the government’s intervention again should focus companies’ attention on geographical risk in their supply chain. In addition, the complaint’s allegations regarding document preservation are a reminder that the government continues to pursue the alleged coverup and not merely the alleged crime.
Interagency Trade Fraud Task Force
On August 29, 2025, the DOJ and DHS built on their trade fraud enforcement momentum by introducing the “‘revitalized and expanded’” Trade Fraud Task Force (TFTF). The TFTF is designed “to bring robust enforcement against importers and other parties who seek to defraud the United States” and to deliver on President Trump’s declared America First Trade Policy, released on January 20, 2025. The DOJ further states that the TFTF will increase U.S. government revenue, bolster domestic industries, boost consumer confidence, and enhance national security.
The TFTF announcement highlights particular areas of emphasis. First, the TFTF will pursue tariff and duty evasion—including AD/CVD—involving, specifically, “below-market, industry-destabilizing goods.” Second, the TFTF will focus on “smugglers who seek to import prohibited goods” and, specifically, “prohibited items that violate intellectual property rights of American companies.” Third, the TFTF will enforce trade laws where fraud “threatens [U.S.] economic and national security interests.” Fourth, the TFTF will bring cases involving other trade-related conduct that “undermine[s] honest American competitors.”
The DOJ emphasized a multifaceted approach to sanctioning violators. Acting Assistant Attorney General Matthew R. Galeotti noted, “The Criminal Division … is committed to using every available tool to hold bad actors accountable and prevent the theft of money intended to reduce the deficit and fund government programs.” The TFTF will “pursu[e] those who violate customs laws through duty and penalty collection actions under the Tariff Act of 1930, actions under the [FCA], and, wherever appropriate, parallel criminal prosecutions, penalties, and seizures under Title 18’s trade fraud and conspiracy provisions.” With respect to criminal charges that the TFTF might pursue, the DOJ’s stated policy is that, “in the absence of unusual facts, prosecutors should charge and pursue the most serious, readily provable offense.” (This policy is articulated in the DOJ’s General Policy Regarding Charging, Plea Negotiations, and Sentencing.)
In the TFTF announcement, the DOJ called upon victims, whistleblowers, and potential violators to assist in the TFTF mission. First, the DOJ asked “domestic industries that are most harmed by unfair trade practices and trade fraud” to use the Criminal Division’s Corporate Whistleblower Program to report suspected violations. Second, the DOJ encouraged “whistleblowers to utilize the qui tam provisions of the [FCA] to alert the government to credible allegations of fraud.” Third, the TFTF encouraged companies to audit their importing practices and “voluntarily self-disclose and remediate unlawful behavior.”
Key Takeaways
- Consistent with the America First Trade Policy, the May 2025 guidance, and the TFTF announcement, the DOJ has significantly increased its focus on criminal and civil enforcement of tariff evasion, misclassification, undervalution, and other trade and customs fraud. The DOJ has indicated it will target both U.S. and non-U.S. companies for alleged violations.
- The U.S. government has used and will increase its use of the FCA as a central tool in this more aggressive enforcement regime.
- Further, given the enhanced financial incentives and the invitation to the public in the TFTF announcement, companies should expect an increase in qui tam actions, both with and without the DOJ’s involvement.
- As a result, U.S. and non-U.S. companies should evaluate their U.S. import compliance policies, procedures, training, and reporting to ensure correct classification and valuation of goods entering the United States for AD/CVD and other tariffs, country of origin, and other purposes.
- Because the DOJ can use the FCA or conspiracy to violate the FCA against companies in the import chain, including non-U.S. exporters, suppliers, and U.S. companies, importers should conduct due diligence to know their supply chains.
- Companies that identify potential violations should considering contacting counsel to assess the contours of exposure, the benefits and risks of VSD, and the possibility of increased qui tam activity under the FCA.
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