Consistent with the Department of Justice’s (DOJ) recent dedication to prioritizing enforcement against fraudsters who are evading customs duties and tariffs, the DOJ announced two customs fraud settlements this month.
DOJ Prioritizing Customs Fraud Enforcement
Given the Trump administration’s recent use of tariffs in its trade policy, it is no surprise that robust customs fraud enforcement is necessary to combat schemes to avoid these tariffs. During his remarks at the Federal Bar Association’s Qui Tam Conference on February 20, 2025, the now former Deputy Assistant Attorney General Michael Granston identified customs fraud and tariff evasion as an area subject to False Claims Act (FCA) enforcement. Likewise, in a May 12, 2025 memorandum, the DOJ Criminal Division announced that it would prioritize investigating and prosecuting trade and customs fraud, including tariff evasion. Additionally, trade, tariff, and customs fraud by corporations were added to the subject areas in which the DOJ is interested in receiving tips for its Corporate Whistleblower Awards Pilot Program.
Recent Customs Fraud Settlements
Two recent settlements prove that companies who evade customs duties will be targets of DOJ enforcement.
On July 23, 2025, DOJ announced a settlement where companies avoided paying duties owed to the U.S. Customs and Border Protection Agency (CBP) by failing to declare the correct country of origin and correct value of products. Global Plastics LLC and Marco Polo International LLC agreed to pay $6.8 million for their failure to pay customs duties on certain plastic resin imported from China. This settlement was a result of the companies self-disclosing their failure to pay duties to the government.
In announcing the settlement, Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division emphasized that that the DOJ “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.” Acting U.S. Attorney Jay McCormack for the District of New Hampshire similarly warned fraudsters that “Companies doing business in the United States must play by the rules, including paying full customs duties owed for imports.” Explaining the importance of holding accountable those who fail to comply with customs rules, Acting Executive Assistant Commissioner Susan S. Thomas of the Office of Trade, U.S. Customs and Border Protection stated that “When companies use unfair trade practices and fraudulent methodologies to avoid paying customs duties, it robs American people of revenue and undermines our economy.”
On July 24, 2025, the DOJ announced that a Pennsylvania-based patio furniture company Grosfillex Inc. (Grosfillex) agreed to pay $4.9 million to resolve allegations made by a whistleblower that Grosfillex violated the False Claims Act by evading antidumping and countervailing duties on items made of extruded aluminum originating from China. In this case, Grossillex hid the aluminum extrusions by packaging the parts as sham furniture kits. Additionally, Grofillex failed to correct customs forms it submitted to CBP that stated that certain parts were not subject to antidumping and countervailing duties.
Announcing the settlement, Special Agent in Charge Edward V. Owens of Homeland Security Investigations (HIS) at the Philadelphia office of U.S. Immigration and Customs Enforcement” emphasized that this case “highlights our relentless dedication to enforcing our nation’s trade laws and protecting the integrity of our economy. By uncovering and dismantling intricate schemes to defraud the government, we ensure that all businesses operate on fair and level playing field.”
Common Types of Customs Fraud
There are several common types of customs fraud employed by importing companies seeking to gain an unfair competitive advantage:
- Falsifying Country of Origin and Transshipping Goods
Importers must identify the country of origin for goods entering the U.S., as certain tariffs may apply depending on where the goods were made.
Fraudsters may falsify the country of origin in submissions to the CBP to avoid tariffs. They may also engage in a scheme called “transshipment” where shipments are rerouted through a third country in order to conceal the true country of origin. Simply rerouting shipments through a third country, or repackaging goods in a third country, does not change the country of origin of goods.
- Misclassifying Goods
Customs duties and tariffs owed depend on the classification of imported goods within a complex system used by the U.S. and internationally. Importers commonly misclassify goods using a code that carries a lower duty rate or one not subject to tariffs to avoid paying duties and tariffs.
- Undervaluing Goods
Importers must accurately declare the value of imported goods as duties and tariffs owed are calculated based on declared value.
Those engaging in customs fraud, however, may falsify the value of goods by misrepresenting the true value (quantity or weight) of the imports in submissions to CBP. To conceal this undervaluing scheme, they may create duplicate invoices, split shipments of large value into shipments of smaller value to avoid triggering duties owed, or fail to include the value of assists (materials, tools, designs, or development provided free of charge) when calculating value of goods.
Bracker & Marcus LLC represents whistleblowers in customs fraud cases brought pursuant to the federal False Claims Act. If you have questions about fraud, we are here to help. Book your free evaluation today.