In a September 2025 client alert, White & Case forecast that the new interagency Trade Fraud Task Force signaled a prioritization and dedication of resources by the U.S. Department of Justice (DOJ) to investigating customs- and trade-related fraud and could lead to a significant increase in both criminal and civil enforcement actions. Two enforcement actions recently announced on the same day show that the DOJ is, in fact, pursuing both criminal and civil enforcement of fraud allegations involving international trade practices. Specifically, these resolutions demonstrate (1) the increasing role of DOJ criminal components in trade fraud investigations, which historically have been handled civilly for the most part, (2) the potential benefits of self-reporting violations to both criminal and civil components of the DOJ, and (3) the more severe consequences that can result when the DOJ learns about misconduct in the absence of a self-report.
Parallel Criminal and Civil Resolutions for Country-of-Origin Misrepresentations
On December 18, 2025, the DOJ's Criminal Division and the U.S. Attorney's Office for the District of New Hampshire announced the criminal resolution of a trade fraud investigation into subsidiaries of a prominent distributor of plastic resin. Historically, many customs fraud investigations have often involved the importation of industrial components. The investigation stemmed from an instruction by the distributor's former chief operating officer (COO) to employees to misrepresent the manufacturer and country of origin submitted to U.S. Customs and Border Protection (CBP) to avoid the payment of Section 301 duties owed on products of Chinese origin. The DOJ announced that it had declined to prosecute the distributor and its two subsidiaries that were implicated in the conduct, as discussed below, but that the former COO had agreed to plead guilty for conspiring to smuggle goods into the United States.1
This criminal resolution followed the importer's July 2025 civil settlement of False Claims Act (FCA) customs fraud allegations.2 The primary allegations in the FCA settlement—that the distributor's subsidiaries misrepresented imports from China as originating from Taiwan or Saudi Arabia—involve the same conduct at issue in the criminal case. The FCA settlement also covered allegations that the subsidiaries failed to mark imports with their country of origin and pay most-favored-nation duties and merchandise processing fees, and undervalued imports to reduce duty payments.
While allegations like these were common in previous FCA customs fraud settlements, prior FCA settlements involving such allegations have not typically included a parallel criminal resolution. That criminal prosecutors pursued a criminal investigation and brought criminal charges against a company executive here demonstrates that the DOJ's criminal components are prioritizing both individual and corporate accountability for trade fraud violations. Parallel criminal and civil trade fraud investigations and enforcement actions may become the new norm.
The Benefits of Self-Reporting
The declination of prosecution of the distributor and its subsidiaries resulted from the distributor's voluntary self-disclosure of the violations, pursuant to Part I of the DOJ Criminal Division's Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP). The FCA settlement indicates that the company voluntarily self-disclosed the violations to CBP and the United States Attorney's Office for the District of New Hampshire in 2024.
As required under the CEP to obtain a declination, the company also fully cooperated and timely and appropriately remediated. In its declination letter, the DOJ emphasized that the company had provided information about the individuals involved in the misconduct as well as substantial factual and data analysis of the import records, and had taken disciplinary actions against employees, conducted a thorough root-cause analysis, and made enhancements to its compliance program.
Significantly, in the criminal case, the DOJ credited the distributor's repayment of the unpaid tariffs in the FCA case, and did not require the distributor to make any additional monetary payment. The distributor's voluntary-self disclosure, cooperation, and remediation also appear to have resulted in benefits for the distributor in the FCA case. The terms of the FCA settlement agreement, including the portion of the settlement amount classified as restitution, suggest that the DOJ applied an FCA multiplier of 1.5 times single damages. That is less than the double damages the DOJ typically seeks in FCA matters and is generally consistent with multipliers applied in FCA resolutions where companies voluntarily self-disclose misconduct and cooperate.
Simultaneous Announcement of Large FCA Customs Fraud Settlement
On the same day the DOJ announced the declination of corporate charges and that the COO had agreed to plead guilty, the DOJ also announced a $54.4 million civil settlement of a customs fraud FCA action.3 The settlement originated from allegations by a qui tam relator filed in 2022. The relator is a self-described "long-time participant in the metalworking products industry who is intimately familiar with Chinese production and sale of sintered tungsten carbide products."4 In allegations also common in FCA customs fraud resolutions, the DOJ alleged that the defendant, a North Carolina-based distributor of tungsten carbide products, engaged in three customs avoidance schemes by:
- Transshipping tungsten carbide products manufactured in China to Taiwan to avoid the payment of Section 301 duties between 2022 and 2024,
- Misclassifying tungsten carbide products on the Harmonized Tariff Schedule to avoid the payment of ad valorem duties between 2015 and 2021, and
- Importing tungsten carbide products that were not marked with the country of origin and failing to pay marking duties between 2019 and 2024.
According to the terms of the settlement agreement, the distributor appeared to pay double damages, which is the default FCA damages multiplier the DOJ applies in pre-intervention settlements in which the defendant did not make a voluntary self-disclosure and cooperate.
Conclusion
The DOJ announced these two resolutions on the same day it announced the conclusion of long-running litigation against a domestic subsidiary of a multinational manufacturer of automotive components, resulting in the recovery of unpaid customs and antidumping duties and over $30 million in civil penalties. These resolutions send the unmistakable signal that the DOJ is using all tools at its disposal to pursue customs and tariff enforcement.
As we discussed in our September 2025 client alert, to avoid and defend against parallel DOJ criminal and civil investigations and qui tam complaints involving allegations of customs fraud, companies should implement robust compliance programs, conduct regular training, and ensure thorough due diligence on supply chain partners. Prompt self-disclosure of potential violations, full and proactive cooperation, and timely and appropriate remediation can lead to declination of criminal prosecution and significantly reduce both criminal and civil penalties. Maintaining clear documentation of compliance efforts and internal investigations is essential for both preventing enforcement actions and mounting effective defenses if an importer's conduct becomes the subject of government scrutiny.
1 Dep't of Justice, Justice Department Resolves Criminal Trade Fraud Investigation with Plastic Resin Distributor; Former Executive Agrees to Plead Guilty, https://www.justice.gov/opa/pr/justice-department-resolves-criminal-trade-fraud-investigation-plastic-resin-distributor.
2 Dep't of Justice, Importers Agree to Pay $6.8M to Resolve False Claims Act Liability Relating to Voluntary Self-Disclosure of Unpaid Customs Duties, https://www.justice.gov/opa/pr/importers-agree-pay-68m-resolve-false-claims-act-liability-relating-voluntary-self.
3 Dep't of Justice, Ceratizit USA LLC Agrees to Pay $54.4M to Settle False Claims Act Allegations Relating to Evaded Customs Duties, https://www.justice.gov/opa/pr/ceratizit-usa-llc-agrees-pay-544m-settle-false-claims-act-allegations-relating-evaded-0.
4 Complaint, United States ex rel. Stover v. Ceratizit USA, Inc., No. 2:22-cv-12291 (E.D. Mich. Sept. 28, 2022).
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