Last month, the Department of Justice (DOJ) and the Department of Homeland Security (DHS) announced that the agencies are partnering on a cross-agency Trade Fraud Task Force to combat tariff and customs evasion and pursue those who seek to import prohibited goods into the country. The Task Force is intended to augment existing coordination within the DOJ, utilizing expertise from both the Civil and Criminal Divisions and DHS. According to the press announcement from the DOJ, the “Administration is fully committed to holding parties accountable for their attempts to undermine honest American competitors.” The agencies will rely on the Tariff Act of 1930, the False Claims Act, and Title 18’s trade fraud and conspiracy provisions to pursue those who evade US customs duties.
The False Claims Act has long been used to pursue customs fraud, and the Trump administration has made it an enforcement priority. In February, the DOJ’s then-Deputy Assistant Attorney General for the Commercial Litigation Branch, Michael Granston, said in a speech that the Trump administration intends to “aggressively” use the False Claims Act as a tool to root out waste, fraud, and abuse, including pursuing importers that try to avoid paying proper customs duties.
Since the two announcements, the administration has reached several important civil settlements to resolve allegations of companies evading customs duties, including settlements related to multi-layered wood flooring, plastic resin, extruded aluminum products, and quartz surface products.
Call for Whistleblowers
As part of last week’s announcement of the Trade Fraud Task Force, the administration issued a call for whistleblowers, saying, “We welcome the vital contributions of whistleblowers who can help identify fraud schemes involving an array of imported products. … Domestic industries are often best placed to spot fraud that threatens our markets and the livelihoods of American workers and their families.”
Whistleblowers play an important role in exposing fraud against the government, especially customs fraud. Whistleblowers with inside knowledge of customs fraud can bring a lawsuit on behalf of the government under the False Claims Act’s qui tam provisions if they know of an individual or entity who is failing to pay customs duties or misrepresenting the value or nature of the goods imported to avoid or reduce the customs duties owed. Qui tam whistleblowers are eligible to receive between 15 and 30% of the government’s recovery.
Whistleblowers often are the only people capable of spotting many types of fraudulent evasion of customs duties. Types of fraudulent evasion of customs duties can include trans-shipping to hide the country-of-origin of goods, double-invoicing schemes to misrepresent the value of goods, miscalculation of the value of goods, and misclassification of goods under the United States Harmonized Tariff System.
Phillips & Cohen has attorneys experienced at winning customs fraud cases, including one of the largest False Claims Act customs settlements at the time against Linde GmbH and its North American subsidiary for $22.8 million for allegedly evading US customs duties on materials it bought and imported to build chemical and natural gas plants.
Whistleblowers will benefit from having an experienced attorney specializing in the multiple whistleblower laws present their case. If you suspect customs fraud and would like to speak to an experienced whistleblower attorney, contact Phillips & Cohen for a confidential review of your case.