DOJ’s Year‑End Customs Fraud Enforcement Signals What’s Ahead in 2026

The U.S. Department of Justice (DOJ) closed out 2025 with a clear message to importers: the Trade Task Force is working hard and trade fraud enforcement will be accelerating into 2026. On one day, December 18, DOJ announced three accomplishments of the Trade Fraud Task Force—resolutions of criminal and/or civil cases where companies paid over $100 million for alleged customs duty evasion. On the same day, U.S. Customs and Border Protection (CBP) issued an alert concerning illegal transshipment, where it signaled escalated enforcement through targeting operations, supply chain audits and investigations under the Enforce and Protect Act. The alert came two days after a CBP press release which stated that CBP is using the “latest data analytics tools to uncover tariff evasion schemes,” including those related to “illegitimate shell companies” and “double dipping” by “claiming more than one tariff exemption to avoid paying revenue owed to the government.”

As we have noted in prior alerts, DOJ’s and CBP’s announcements underscore the growing momentum behind DOJ’s Trade Fraud Task Force launched in August 2025 and the ongoing cross-agency collaboration of DOJ’s Criminal and Civil Divisions, with the U.S. Department of Homeland Security (DHS), to bring all government enforcement tools to bear to redress and deter customs duty evasion.

DOJ Announces Largest Customs Related False Claims Act Settlement to Date

DOJ announced a $54.4 million settlement with Ceratizit USA LLC (Ceratizit) to resolve allegations that the company misrepresented the country of origin of tungsten carbide products to evade Section 301 duties. DOJ alleged that Ceratizit declared the products as manufactured in Taiwan when, in fact, they were produced in China and transshipped through Taiwan to conceal their Chinese origin, thereby avoiding tariffs applicable to Chinese made goods. DOJ also alleged that the company knowingly misclassified products to reduce duties owed to CBP.

The settlement under the civil False Claims Act (FCA) (31 U.S.C. §§ 3729-3733) is the largest customs-related FCA recovery for the government to date. It resolved claims filed under the FCA’s qui tam whistleblower provisions in 2022, illustrating how an announced priority like the Trade Fraud Task Force will re-energize and re-prioritize existing investigations in addition to launching new ones. DOJ announced that the whistleblower in the case received $9,750,000 of the DOJ recovery and explicitly encouraged more whistleblowers to come forward, echoing its prior calls to competitors and others with knowledge of customs duty evasion to claim the very significant monetary rewards for filing qui tam claims. 

DOJ Declines Corporate Prosecution But Criminally Charges the Executive

On the same day, DOJ announced a criminal resolution of a customs fraud investigation into MGI International, LLC and its subsidiaries Global Plastics LLC and Marco Polo International LLC. DOJ declined to prosecute the companies and credited $6.8 million for previously paid civil FCA liability stemming from allegations that they misrepresented the country of origin of plastic resin imported from China to evade Section 301 duties.

At the same time, MGI’s Chief Operating Officer pled guilty to conspiracy to smuggle goods into the United States (18 U.S.C. § 545).

DOJ attributed its decision to decline corporate prosecution to the company’s timely and voluntary self-disclosure, full and proactive cooperation, and timely and appropriate remediation. In reaching that determination, DOJ applied the Criminal Division’s Corporate Enforcement and Voluntary Self Disclosure Policy, which was revised in May 2025 and provides for declinations of criminal prosecution when companies satisfy defined criteria and no aggravating factors are present.

This resolution highlights DOJ’s continued commitment to individual accountability and to using enforcement against executives as a powerful trade fraud deterrent. Even where companies receive criminal declinations, DOJ remains willing to pursue individuals who act knowingly and willfully. DOJ prosecutors are expressly instructed to consider the adequacy of prosecutions of individuals responsible for misconduct when evaluating whether to charge a corporation—a framework that increases the likelihood of individual charges where there is a corporate declination. 

DOJ Collects Over $53 Million in Civil Penalties Against Wanxiang America

In a third matter, the United States collected more than $53 million to resolve civil penalty allegations against Wanxiang America Corporation. DOJ alleged that Wanxiang made false statements to customs officials and misclassified automotive components to avoid customs and antidumping duties, in violation of 19 U.S.C. § 1592.

Key Takeaways

Collaboration: DOJ’s Trade Fraud Task Force is functioning as the coordinating hub to deploy DOJ’s civil and criminal tools in parallel, working closely with CBP partners at DHS. Each case illustrates DOJ’s integrated civil-criminal approach to tariff enforcement. Ceratizit and Wanxiang proceeded as civil enforcement actions with significant monetary recoveries. MGI involved concurrent civil FCA liability, a corporate criminal investigation and an individual criminal prosecution.

Whistleblowers: Whistleblowers and relators are key drivers of enforcement, particularly in FCA cases. Whistleblowers in FCA qui tam cases are entitled to shares of up to 30% of any government recovery, and their attorneys’ fees are paid by the defendant. Even those who participated in the fraud can qualify for a hefty share. Company employees and competitors are especially likely to file, but personal knowledge about the alleged fraud scheme is not required. The Trade Fraud Task Force has no doubt resulted in an uptick in qui tam filings that will come to light as investigations proceed, and CBP reported 1,200 investigations into revenue-focused allegations made through its e-Allegations portal, a platform that allows the trade community and general public to report suspected trade violations. The Task Force will also begin to rely on DOJ’s Corporate Whistleblower Awards Pilot Program, which was expanded in May to cover trade, customs and tariff violations. 

Historical Compliance: Companies may need to account for historical non-compliance. None of the cases turned on spontaneous or isolated misconduct. Instead, all involved allegedly long‑running import patterns, historical conduct and documentary evidence embedded in customs filings, invoices and supply‑chain records. The FCA has a six- to 10-year statute of limitations that stops running as soon as a sealed qui tam complaint is filed even if the government then takes years to investigate the case before it becomes public. The Ceratizit settlement resolved conduct that went back to 2015 and arose from a qui tam filed in September 2022. 

Robust Compliance: Companies should proactively reassess tariff compliance programs, including country of origin determinations, classification practices, supply chain routing, and internal monitoring and investigation protocols, to mitigate escalating enforcement risk. And, companies should keep in mind that robust compliance programs, along with voluntary self-disclosure, cooperation and remediation can result in substantially more favorable outcomes from the Criminal Division under DOJ’s revised Corporate Enforcement and Voluntary Self-Disclosure Policy and from the Civil Division under DOJ’s separate longstanding policy of awarding settlement credit in FCA cases.