Record-Setting False Claims Act Settlement Highlights DOJ Commitment to Customs Enforcement

On December 19, 2025, the Department of Justice (DOJ) announced a $54.4 million settlement with Ceratizit USA, LLC, a distributor of tungsten carbide products, resolving allegations that the company violated the False Claims Act (FCA) by evading customs duties on products imported from China. This settlement is believed to be the largest ever customs-related FCA resolution, and this high-water mark underscores the government’s heightened enforcement focus on tariff evasion.

The DOJ has made compliance with customs laws a priority for both civil and criminal enforcement. The DOJ and Department of Homeland Security (DHS) launched a cross-agency Trade Fraud Task Force in late summer. This is consistent with the DOJ’s intention to “aggressively” enforce the FCA, with a particular focus on “illegal foreign trade practices.” The alleged conduct Ceratizit resolved through the settlement agreement highlights three distinct categories of customs violations that can lead to FCA exposure for U.S. importers. Ceratizit resolved allegations that it had knowingly (1) misrepresented the origin of products that had been manufactured in China and transshipped through Taiwan, thereby avoiding Section 301 duties; (2) misclassified products under the Harmonized Tariff Schedule, thereby reducing the applicable general duty rate to zero; and (3) imported merchandise that was not properly marked with the country of origin and failed to pay required marking duties before distributing the unmarked products to U.S. consumers. Moreover, the $9.75 million award to the whistleblower in connection with the settlement demonstrates the powerful financial incentives for relators to report customs violations pursuant to the FCA’s qui tam provisions.

In light of the administration’s prioritization of customs enforcement combined with the increased focus on customs cases from the relator’s bar, companies should expect elevated scrutiny of customs compliance practices in the years ahead. Furthermore, the administration’s focus on enhancing cross-agency coordination means that multiple agencies, including DOJ and DHS (which includes Customs and Border Protection (CBP) and Homeland Security Investigations (HSI), within Immigration and Customs Enforcement (ICE)), are bringing their authorities to bear, improving the government’s ability to marshal information across the agencies to build its cases.

Crowell continues to monitor developments in the customs space and their impact on business and industry going forward. For more information on our experience helping clients navigate customs-related FCA actions, visit our FCA Customs Fraud Practice page here.