DOJ Continues Full Court Press Against Customs Fraud and For Whistleblowers to Help the Charge

By the Constantine Cannon Whistleblower Team

On July 14, the Department of Justice (DOJ) announced it had crossed the $1 billion threshold in civil and criminal customs fraud recoveries since launching its Trade Fraud Task Force last August.[1]  DOJ described it as a major milestone that “reflects a fundamental shift in the federal government’s approach to customs and trade enforcement, emphasizing rigorous criminal prosecution and civil enforcement under the False Claims Act.”

Is Customs Fraud Still a Top DOJ Enforcement Priority?

DOJ established the Task Force with the Department of Homeland Security to go after companies duping Customs and Border Protection (CBP) by evading customs duties and tariffs or otherwise illegally importing goods into the U.S.  Protecting American businesses and the public from illegal imports has been a top priority of the Trump Administration, as is reflected in the litany of False Claims Act customs fraud settlements this past year, including two that brought in record recoveries for the Government.

Just two months ago (in May), California-based Perfectus Aluminum agreed to pay $549.5 million to settle False Claims Act charges of evading customs duties on aluminum extrusions imported from China.  It was the largest customs fraud settlement ever.  And in December, Ceratizit USA agreed to pay $54.4 million to settle similar allegations, what had been the largest such settlement before Perfectus.  These are just two of the many customs fraud settlements DOJ has recently secured.  Others include Redi-Bag (July); Royal Canadian Steel (May 2025); Harman International (November 2025); Allied Stone (August 2025); Global Plastics and Marco Polo International (July 2025); Grosfillex (July 2025); Evolutions Flooring (March 2025).

In announcing these settlements, the Government has repeatedly stressed its zero-tolerance for customs fraud and its strong commitment to go after any company that tries to scheme around CBP.  In announcing the $1 billion Task Force milestone, the Government was equally forceful in reinforcing this top enforcement priority, with DOJ National Fraud Enforcement Division Chief Colin McDonald leading the charge:

“For too long, fraud actors have viewed customs violations as a mere surcharge or cost of doing business.  By utilizing the Department’s full weight, we are making it clear that trade fraud is a serious economic crime.  This billion-dollar milestone demonstrates that the United States and the National Fraud Enforcement Division will no longer allow the integrity of our country’s borders and markets to be compromised for illicit profit.  This message should be heard loud and clear by all supply-chain actors.”

Several other top enforcement officials echoed this sentiment.  CBP Commissioner Rodney Scott stressed that “ensuring the global supply chain remains a level playing field for law-abiding American businesses is a critical component of CBP’s mission,” and that his agency’s “message is clear: those who seek to exploit America’s trade system will be identified, investigated, and brought to justice.”  And DHS Investigations Director John Condon added that “by holding offenders accountable, we build trust in the products people rely on every day and support a fair marketplace for honest businesses.”

What Can Whistleblowers Do to Help Enforce Customs Fraud?

Despite the all-in agency approach to protecting against customs fraud, the Government has repeatedly recognized the critical role whistleblowers play in reporting violations that might otherwise be difficult or even impossible for the Government to uncover on its own.  Indeed, DOJ has put the call out to customs fraud whistleblowers in virtually every press release it has put out relating to this enforcement area.

DOJ’s latest Task Force press release followed this pattern, highlighting how the agency “encourages whistleblowers to alert the government to credible allegations of fraud.”  It specifically pointed to whistleblowers using the qui tam provisions of the False Claims Act, which allow private parties to bring lawsuits against those defrauding the Government and to share in any Government recovery.  DOJ also pointed to its Corporate Whistleblower Awards Pilot Program, which DOJ expanded in May 2025 to specifically target customs fraud.

Unsurprisingly, whistleblowers have originated the majority of False Claims Act cases involving customs fraud including those against Perfectus, Ceratizit, Redi-Bag, Royal Canadian Steel, Harman, Allied Stone, Grosfillex, and Evolutions Flooring.  Without whistleblowers coming forward in those matters, it is very likely the Government would have never learned of the companies’ alleged violations.

What Has DOJ Highlighted As the Most Common Areas of Trade and Customs Fraud?

In a further effort to smooth the path for whistleblowers in this area, DOJ in conjunction with its recent Task Force announcement released a Resource Guide to Trade Fraud Enforcement, which DOJ describes as “a historic and seminal roadmap for cross-border compliance and enforcement priorities.”[2]  Among the information it provides is a listing of the most common forms of trade and customs fraud, including:

• • Manifest Fraud. This involves misrepresenting or manipulating cargo data in the manifest submitted to CBP, including falsely describing the cargo, concealing prohibited items, and splitting shipments to avoid regulatory scrutiny.

• • False Country of Origin. This fraud involves misrepresenting the country where a good was manufactured to avoid or pay lower customs duties, such as Section 301 duties or antidumping or countervailing duties.  A common scheme in this area is transshipping the good through another country and falsely declaring that country as the country of origin.  Unless the product is substantially transformed in that country — simple assembly or repacking is not enough — transshipping does not change the country of origin.

• • False HTS Classification. This involves using the incorrect Harmonized Tariff Schedule (HTS) code to avoid or pay lower customs duties.  A common scheme in this area is describing finished goods as parts, representing raw material as recycled, or simply claiming a high-duty import falls under a low-duty or duty-free code.

• • This involves reporting a lower value for the imported goods than the actual price paid or the true market value of the goods so the customs duty is based off a smaller amount.  This sometimes involves using fake invoices that report lower manufacturer sales prices than the amounts the importer actually paid.

• • Anti-Dumping/Countervailing Duty Evasion. Antidumping duties protect against “dumping” products into U.S. markets at below-cost prices.  Countervailing duties offset foreign government subsidies that otherwise enable foreign companies to sell cheaper products in the U.S.  These duties can often be multiples higher than general duties, sometimes exceeding 600% of declared value.  Importers often try to evade these duties by claiming a false country of origin or misclassifying goods to fall outside the reach of these duties.

• • Shell Company Fraud. This involves using a shell company as the Importer of Record with no real assets and which is dissolved after the goods enter the country so that CBP has no entity to go after for unpaid customs duties.

• • Drawback Fraud. Drawback is a program where the Government refunds 99% of duties paid on imported goods that are later exported.  Drawback fraud involves making drawback claims on exports that never occurred or exporting sham or substitute goods falsely claiming they comprise the imports on which the original duties were paid.

• • Fraudulent Product Certifications. This involves importing goods using falsified regulatory certifications or certifications secured by fraud.  Examples include an importer of children’s toys forging the required Children’s Product Certificate to hide the presence of toxic chemicals or a car maker importing vehicles with EPA Certificates of Conformity regarding emissions secured by fraud.

• • Illegal Timber and Wildlife Laundering. This involves importing protected timber or wildlife by mischaracterizing them as nonprotected species in violations of the Lacey Act or Endangered Species Act.

Constantine Cannon Whistleblower lawyer Dan Noel, who has substantial experience representing customs fraud whistleblowers, applauded the Government for its continued efforts to crack down on customs fraud and for so openly inviting whistleblowers to join the crusade.  “The Government recognizes the critical role whistleblowers play in reporting customs fraud,” Noel says, “and has made it very clear it wants and needs their help in this area.”  He adds, “the newly released Resource Guide is just the Government’s latest effort to invite whistleblowers into the fold and direct them to where customs activity is most ripe for foul play.”

Constantine Cannon Has Substantial Experience Representing Customs Fraud Whistleblowers Under the False Claims Act

Constantine Cannon has substantial experience representing customs fraud whistleblowers under the False Claims Act.  In one of our more notable cases, the firm represented a whistleblower alleging an auto parts distributor misclassified brake pads imported from Asia to avoid millions of dollars of customs duties.  The company settled that matter for $8 million with our client receiving 18.5% of the Government’s recovery.

If you would like to learn more about our other whistleblower successes, customs fraud, the False Claims Act, or what it means to be a whistleblower more broadly, please do not hesitate to contact us.  We will connect you with an experienced member of the Constantine Cannon whistleblower team for a free and confidential consultation.

[1]  See https://www.justice.gov/opa/pr/trade-fraud-task-force-surpasses-1-billion-recoveries-and-charged-losses-less-one-year.

[2]  See https://www.justice.gov/fraud/media/1452331/dl?inline.

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