Customs Fraud and the False Claims Act

Crowell regularly helps U.S. importer clients  navigate False Claims Act (FCA) enforcement actions and government investigations into allegations of customs fraud. Recent years have seen a steady rise in the number of FCA matters initiated by whistleblowers or the Department of Justice (DOJ) alleging that an importer has unlawfully underpaid customs duties.  

A Growing Risk to U.S. Importers

In the early weeks of the second Trump administration, the DOJ announced the administration’s intention to make “illegal foreign trade practices” a major focus of FCA enforcement. In light of this enforcement priority, and the administration’s expansive use of tariffs, U.S. importers face increasing risks due to the FCA’s treble damages and the whistleblower provisions that incentivize private citizens to file qui tam lawsuits on behalf of the government by affording them up to a 30% share of the money recovered. There have been a growing number of FCA actions—sometimes filed by competitors—alleging that an importer avoided paying duties owed to US Customs and Border Protection (CBP) in one of the following ways:

• Misclassifying products under the Harmonized Tariff Schedule;
• Underreporting the value of the goods to which CBP applies the duty rate;
• Misrepresenting the country of origin; or
• Avoiding antidumping, countervailing and other duties imposed under different trade remedy laws (e.g., Section 201, 232 or 301 duties).

Crowell’s Multidisciplinary Approach

Crowell draws upon the substantive knowledge of our international trade attorneys, who have decades of experience advising importers on customs issues. When engaged in the early stages of an investigation (e.g., following CBP’s issuance of a CF-28 request for information) our trade attorneys help clients investigate the underlying facts, implement remedial measures, and respond strategically to CBP to mitigate risks.

When DOJ issues Civil Investigative Demands or grand jury subpoenas, our Trade teams’ in-depth familiarity with the CBP regulatory regime is paired with the extensive experience of our FCA and white-collar defense attorneys who routinely help companies conduct internal investigations, respond to DOJ investigations and whistleblower actions.

Our team also draws upon our understanding of the relevant government offices most frequently involved in these matters. Not only have we practiced before these offices in scores of matters, but we have a deep bench of former CBP attorneys and federal prosecutors who bring to bear their familiarity with the processes and interests of the various government stakeholders.