DOJ Announces Significant Enforcement Actions Targeting Customs And Trade Fraud

On December 18, 2025, the United States Department of Justice (DOJ) announced two significant enforcement actions demonstrating its commitment to combating customs and trade fraud. As Shook attorneys advised in Bloomberg Law this past May, the DOJ Criminal Division published a White-Collar Enforcement Plan that named "[t]rade and customs fraud, including tariff evasion" as the second priority on its list of "high-impact areas" that it will "prioritize investigating and prosecuting." These and other recent actions by DOJ have shown this is more than just talk; customs and trade fraud is an area that should be on every international company's radar.

Trade-Related Criminal Conspiracy Prosecution

First, Deputy Attorney General Todd Blanche and Acting Assistant Attorney General Matthew R. Galeotti of the Justice Department's Criminal Division announced that the chief operating officer of MGI International, LLC had been charged with and pleaded guilty to conspiracy to smuggle goods into the United States under 18 U.S.C. §§ 371 and 545. According to his plea agreement in the U.S. District Court for the District of New Hampshire, the COO instructed subordinates to misrepresent the manufacturer and country of origin on paperwork that was submitted to U.S. Customs and Border Protection (CBP) in order to avoid paying almost $500,000 in required Section 301 duties. Under the terms of the plea agreement, the United States agreed to seek a term of imprisonment of up to 24 months for the COO, though he has reserved his right to litigate the final sentence. Blanche explicitly framed these charges as a sign of things to come, stating they "demonstrate[e] that... the department will hold to account individuals and corporations who lie to evade tariffs and duties."

At the same time, DOJ announced that it had declined to prosecute MGI International criminally for this same conduct, noting that MGI had already paid $6.8 million to resolve its civil liability under the False Claims Act. It also emphasized MGI's timely and voluntary self-disclosure of the misconduct, full and proactive cooperation, and timely and appropriate remediation. Blanche stated that the corporate resolution made "clear what the incentives for corporations are to voluntarily self-disclose and remediate identified criminal conduct."

This case was coordinated through the relatively new Department of Justice Trade Fraud Task Force, a cross-agency law enforcement effort involving the Criminal Division's Fraud Section, the Civil Division, the Department of Homeland Security and U.S. Attorney's Offices nationwide. Special Agent in Charge Michael J. Krol for Immigrations and Customs Enforcement Homeland Security Investigations New England emphasized that the United States government is "committed to enforcing tariff regulations and will relentlessly pursue those who seek to circumvent them," noting that "[w]hen bad actors attempt to evade these tariffs, they undermine the integrity of our trade system and disadvantage honest businesses."

$54 Million False Claims Act Resolution

Also on December 18, DOJ's Civil Division announced that Ceratizit USA LLC, a North Carolina-based distributor of tungsten carbide products, had agreed to pay $54.4 million to resolve allegations that it violated the False Claims Act by knowingly and improperly failing to pay duties owed on tungsten carbide products imported from China. Ceratizit was alleged to have misrepresented to CBP that the imported goods originated in Taiwan, when in fact it knew they had been manufactured in China and transshipped to Taiwan to avoid paying Section 301 tariffs. Ceratizit also allegedly misclassified tungsten carbide products using the incorrect Harmonized Tariff Schedule code to further reduce the duties owed to CBP. The settlement with the Civil Division did not purport to release Ceratizit from any potential criminal liability.

The Ceratizit action was originally initiated in the Eastern District of Michigan by a whistleblower, who DOJ indicated would receive approximately $9.75 million of the settlement proceeds. The False Claims Act permits private parties to file suit on behalf of the United States for false claims and to share in a portion of the government's recovery. In announcing the Ceratizit resolution, DOJ mentioned its Trade Fraud Task Force and emphasized that it "encourages whistleblowers to utilize the qui tam provisions of the False Claims Act to alert the government to credible allegations of fraud."

Enforcement Actions Likely Just Beginning

As Shook attorneys have previously advised, customs and trade fraud is likely to be a strong focus for President Donald Trump's second administration, and businesses should similarly make it a focus for their compliance programs. In addition to naming customs and trade fraud as one of its top areas of focus in the May 2025 White-Collar Enforcement Plan, DOJ also revised its Corporate Whistleblower Awards Pilot Program to add "[t]rade, tariff, and customs fraud by corporations" as a priority area of focus. And in July 2025, DOJ Criminal Division announced it would be shifting resources to trade cases with the formation of a unit dedicated to customs and trade fraud cases. Galeotti stressed that DOJ would be "responding to the call of law-abiding businesses that don't want to—and should not—be put at a competitive disadvantage for paying their lawful share," and that "[t]he criminal code provides tools for prosecutors tailored specifically to this problem." Indeed, 18 U.S.C. § 545, on which the criminal charges of the MGI COO were premised, applies to anyone who "receives, conceals, buys, sells, or in any manner facilitates the transportation, concealment, or sale" of merchandise that is "contrary to law." And companies or their executives need not have actual knowledge of the customs or trade fraud to be prosecuted for this felony punishable by up to 20 years in prison; evidence they deliberately avoided learning the truth can suffice. Other criminal statutes including 18 U.S.C. §§ 541 and 542 may also come into play. Suffice it to say that DOJ has ample means to criminally prosecute customs and trade fraud and it intends to use them.

Be Prepared

What can companies do to be prepared for this new focus on customs and trade fraud? Supply chain audits, which companies have long used to root out corruption or inefficiency among their business partners, can also be adapted to ensure that a company's suppliers are supplying accurate information and paying appropriate tariffs. Effective compliance programs tailored to a company's significant risks, adequately resourced and empowered to function effectively, can go a long way towards influencing the government's view of charging decisions and ultimate penalties. With the assistance of counsel, such compliance programs and audits can be appropriately scoped to a business's global footprint, industry and risk profile, and kept strictly confidential under the auspices of privilege. These programs may also help companies to receive and investigate whistleblower complaints internally, which will allow for remediation and self-reporting to the government, which can play a significant role in reaching a favorable resolution. With DOJ's focus clearly turning to issues of customs and trade fraud, now is the time for companies to be proactive to avoid civil and criminal liability in the future.

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