Promises Kept: The Trade Fraud Enforcement Boom Continues

In early December, senior officials from the Department of Justice (“DOJ”) made public remarks at the American Conference Institute’s 42^nd Annual Conference on FCPA and Global Anti-Corruption in Washington, D.C., about the Department’s commitment to combatting trade fraud, an area that was underenforced according to Deputy Attorney General Todd Blanche. Any lingering doubts about the DOJ’s emphasis on trade fraud as a top enforcement priority were recently put to rest as it became evident that the trade fraud enforcement boom is here to stay.

On December 19, 2025, the DOJ made substantial announcements showcasing their resolve to pursue coordinated, cross-agency actions to detect, deter, and prosecute trade fraud, spearheaded by the recently created Trade Fraud Task Force, and reinforcing that evading customs duties will result in substantial civil and criminal consequences.

Criminal Enforcement and Individual Accountability

The DOJ announced a resolution of a criminal trade fraud investigation into MGI International, LLC and its subsidiaries (“MGI”), a leading global plastic resin distributor, relating to falsified country‑of‑origin declarations to avoid Section 301 duties on products of Chinese origin. The DOJ declined criminal prosecution of MGI under Part I of the Criminal Division’s Corporate Enforcement and Voluntary Self‑Disclosure Policy, based in part on MGI’s prior timely and voluntary self-disclosure and prior payment of $6.8 million by the company in a related False Claims Act settlement regarding the same conduct.

Separately, MGI’s former Chief Operating Officer was charged by criminal Information and agreed to plead guilty in the District of New Hampshire to conspiracy to smuggle goods into the United States based on his instructions to subordinates to misrepresent the manufacturer and country of origin on paperwork submitted to U.S. Customs and Border Protection (“CBP”) in order to avoid paying Section 301 duties. Deputy Attorney General Todd Blanche made clear the Department’s continuing focus, stating, “As this announcement demonstrates, the department will hold to account individuals and corporations who lie to evade tariffs and duties.” DOJ highlighted that corporations have clear incentives to voluntarily self‑disclose and remediate, while individuals who orchestrate fraud will be held accountable.

Whistleblowers Driving Civil Recoveries

DOJ’s civil enforcement is delivering substantial recoveries too, while signaling that misclassification, false country of origin claims, and marking violations carry real costs.

Ceratizit USA LLC, a North Carolina-based distributor of tungsten carbide products, agreed to pay $54.4 million to resolve False Claims Act allegations that it avoided duties on Chinese‑manufactured tungsten carbide products by misrepresenting the country of origin and misclassifying goods, and by distributing unmarked merchandise without paying marking duties. The goods were manufactured in China and transshipped to Taiwan before ultimate shipment to the United States. In the announcement, Commissioner Rodney S. Scott of CBP stated, “Attempts at duty evasion have always existed, regardless of the tariff environment. These schemes are vast and complex, but CBP professionals are well-trained and positioned to detect, deter, and disrupt tariff evasion schemes to ensure that duties are paid.”

The matter arose from a whistleblower filing a qui tam lawsuit in the Eastern District of Michigan, with the whistleblower receiving approximately $9.75 million of the settlement proceeds. In the announcement, the DOJ encouraged additional whistleblowers to come forward and file qui tam lawsuits alerting the government to credible allegations of fraud.

A Coordinated Strategy: Civil–Criminal Synergy and Whistleblower Engagement

DOJ’s approach blends parallel civil and criminal tools, deep coordination with CBP, and active engagement and recruitment of whistleblowers. The Trade Fraud Task Force augments the DOJ’s internal coordination, enabling aggressive pursuit of tariff evasion schemes and smuggling. The Criminal Division of DOJ, in coordination with the Task Force, is leveraging all departmental tools to fight fraud and recover funds for the public fisc, including the aggressive use of data analytics.

DOJ leadership has underscored that customs evasion harms U.S. manufacturers and that the Department will use all available tools to maintain a level playing field. Expect continued announcements like these highlighting the work of the Trade Fraud Task Force and its partners, as the DOJ continues to dedicate substantial resources focusing on the conduct of importers.

Key Takeaways

Given the heightened federal scrutiny regarding importation, particularly of goods from China, to mitigate risk and potential liability, importers should consider:

• Prioritization of country of origin and Harmonized Tariff Schedule classifications.
• Engagement in robust audits of import and supply chain practices.
• Implementation and adherence to internal trade compliance programs.
• Review of prior self-disclosures to CBP to assess historical risk.
• Do not ignore internal complaints; conduct timely internal investigations.
• The use of data analytics to understand how the company’s import activities might appear to regulators.

For more information about this and other enforcement trends, please contact Jay McCormack at (617) 357-3776 and jmccormack@verrill-law.com. Jay is a Partner in the White Collar Defense & Government Enforcement and Health Care & Life Sciences practices at Verrill. He is a former federal prosecutor who specialized in fraud and previously served as the Acting U.S. Attorney for the District of New Hampshire.