Baseline, Not a Finish Line: FCA Customs Enforcement at Mid-Year 2026

This alert reviews key developments from 2025 and 2026 and highlights what importers should know as enforcement continues to intensify.

False Claims Act Enforcement in Customs: What Importers Need to Know

The FCA, originally enacted during the Civil War to combat fraud by government contractors, imposes civil liability on any person who knowingly submits, or causes the submission of, a false claim for payment to the United States government. The statute’s reach is broad: it also covers material false records or statements made in connection with any obligation to pay money to the government, including customs duties, antidumping and countervailing duties, and tariffs owed on imported goods. The FCA also includes powerful qui tam provisions, which allow private citizens — known as relators or whistleblowers — to file suit on the government’s behalf and share in any resulting recovery. Violations carry treble damages and per-claim penalties, making the FCA one of the most potent enforcement tools in the federal government’s arsenal.

Although the FCA has traditionally been associated with health care and defense procurement fraud, its application to international trade and customs violations has grown significantly in recent years. Importers are required to make numerous representations to US Customs and Border Protection (CBP) when bringing goods into the country, including declarations regarding country of origin, product classification under the Harmonized Tariff Schedule of the United States, and the applicable duty rates. When those representations are knowingly false, they can give rise to FCA liability. The intersection of the FCA and customs law has created a parallel enforcement pathway.

The current enforcement landscape reflects a dramatic escalation, fueled by President Trump’s “America First Trade Policy” announced on Inauguration Day and the establishment of the interagency Trade Fraud Task Force (TFTF) in August 2025. On July 14, the DOJ announced that the TFTF has surpassed $1 billion in criminal and civil recoveries, penalties, forfeitures, and charged losses in less than one year since its launch — a figure leadership described as “a baseline, not a finish line.” In this alert, we summarize the key FCA enforcement actions and legal developments from 2025 and 2026 that are shaping the customs enforcement landscape. We examine the major settlements, the expanding scope of the TFTF’s operations, and the DOJ’s evolving enforcement strategy. We also provide our predictions for what importers should expect in the latter half of 2026 and offer practical recommendations for companies seeking to mitigate their FCA exposure in an increasingly aggressive enforcement environment.

FCA Fundamentals and the Intersection of Customs Law

Elements of an FCA Claim

To establish liability under the FCA, the government must show the following.

• Submission of a Claim: A “claim” includes any request or demand for money or property presented to the federal government.

• Falsity: False claims may be factual or legal, often taking the form of explicit false statements or misrepresentation and concealment of material facts.

• Knowledge: The violator must have knowingly submitted the false claim. Knowledge is broadly defined to include actual knowledge, deliberate ignorance, or reckless disregard of the truth. Specific intent is not required.

• Materiality: The false statement must be material to the government’s payment decision.

• Causation: The false statement must have caused the government to pay or approve the claim.

The FCA’s qui tam provisions allow anyone to file suit on the government’s behalf, creating risk not just from government enforcement, but from competitors and employees who share in any recovery. As discussed below, 2025 saw a record number of qui tam complaints alleging customs fraud.

Most crucially for importers, the FCA also includes a “reverse false claims” provision imposing liability on any person who “knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money … to the Government … or knowingly conceals or … avoids or decreases an obligation to pay or transmit money … to the Government.” 31 U.S. Code § 3729(a)(1)(G) (emphasis added). For example, in 2024, the Southern District of New York confirmed in United States ex rel. Taylor v. GMI USA Corp. that the requirement to pay customs duties constitutes an obligation to pay the government. In that case, the relator alleged that the defendants engaged in a scheme to falsify footwear declarations — documents submitted to customs brokers to determine proper tariff classifications and duty rates — by misrepresenting the material composition and characteristics of imported footwear. These false declarations caused the customs broker to prepare and submit Entry Summary forms (Form 7501) that understated the duties owed, resulting in the defendants knowingly avoiding their obligation to pay the correct customs duties to the United States. The court held that the complaint sufficiently alleged a reverse FCA claim.

Penalties

FCA violators face no less than three times the amount of damage which the government sustains because of the false claim, as well as inflation-adjusted civil penalties ranging from $14,308 to $28,619 per claim. These severe penalties, combined with the qui tam incentive structure, make FCA exposure a critical concern for importers.

Key FCA Customs Enforcement Actions in 2025 and 2026, Including Record-Breaking Settlements

2025 Settlements

Enforcement of the FCA against importers surged in the second half of 2025. Specifically, FCA settlements and judgments involving customs fraud totaled more than $100 million in 2025.

Notably, the Ninth Circuit confirmed in Island Industries v. Sigma Corporation that traditional customs penalty methods under 19 U.S.C. § 1592 exist alongside FCA enforcement. The court upheld a $26 million FCA judgment for fraudulent evasion of antidumping duties on Chinese pipe fittings and confirmed that customs qui tam suits may proceed in federal district courts rather than being confined to the Court of International Trade (see our July 2025 alert here).

Other enforcement actions include the following.

• United States ex rel. Stover v. Ceratizit USA, Case No. 22-cv-12291 (E.D. Mich.): In December 2025, the DOJ secured a $54.4 million settlement against Ceratizit USA for alleged transshipment of Chinese tungsten carbide products through Taiwan with false country-of-origin declarations, misclassification of products under incorrect Harmonized Tariff Schedule codes, and failure to pay marking duties on unmarked goods. The alleged misconduct spanned from June 2015 through March 2024. The qui tam relator received approximately $9.75 million. The settlement expressly preserved potential criminal exposure, underscoring the DOJ’s integrated use of FCA remedies alongside traditional trade statutes.

• United States ex rel. Urban Global LLC v. Struxtur Inc., Case No. 20-cv-07217 (C.D. Cal.): In March 2025, the DOJ reached a settlement for $8.1 million from Evolutions Flooring Inc. for evasion of antidumping, countervailing, and Section 301 duties on multilayered wood flooring manufactured in China and imported between 2019 and 2022. The DOJ alleged that Evolutions caused false information to be submitted to CBP regarding the identity of the manufacturers and country of origin of the imported flooring. The qui tam relator who filed the suit received $1.2 million from the settlement.

• United States ex rel. Lee v. Barco Uniforms Inc., Case No. 16-cv-1805 (E.D. Cal.): In April 2025, the DOJ filed suit in the US District Court for the Eastern District of California against Barco Uniforms Inc., Kenny Chan, David Chan, and companies operated and controlled by the Chans for knowingly and improperly underpaying customs duties on apparel for restaurants and health care providers. The complaint alleges that Barco undervalued its imports through a double-invoicing scheme in which they provided false entry summary documents to CBP. Barco Uniforms filed a motion for judgment on the pleadings on March 16, arguing, inter alia, that the court should dismiss all counts, or, alternatively, the majority of the government’s complaint, for lack of subject matter jurisdiction, or, in the alternative, that it is entitled to judgment on the pleadings under Fed. R. Civ. Pro 12(c) because the complaint fails to allege sufficient facts to support a cognizable legal theory. The motion is fully briefed and under consideration by the court. 

• MGI International’s Subsidiaries, Global Plastics LLC, and Marco Polo International LLC: In July 2025, MGI International’s subsidiaries, Global Plastics LLC and Marco Polo International LLC, settled a civil FCA claim for $6.8 million for knowingly failing to pay customs duties on plastic resin imported from China. The settlement followed voluntary self-disclosure by the company, which supported some leniency on the part of the government. In December, the DOJ resolved a parallel criminal investigation into MGI, declining to prosecute under the Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy and crediting the earlier civil payment, citing the company’s timely self-disclosure, full cooperation, and extensive remediation. The Task Force also showed it will pursue individuals: MGI’s former COO pleaded guilty to conspiracy to smuggle goods into the United States based on his instructions to subordinates to misrepresent the manufacturer and country of origin on customs filings to avoid Section 301 tariffs.

• United States ex rel. Wisner v. Grosfillex, Inc., Case No. 20-cv-511 (E.D. Pa.): In July 2025, the DOJ settled for $4.9 million with Grosfillex for submitting false customs forms that mischaracterized aluminum furniture components as not subject to antidumping and countervailing duties on extruded aluminum furniture parts from China. The DOJ also alleged that Grosfillex attempted to disguise aluminum extrusions by packaging them as “sham” furniture kits. The qui tam relator who filed the suit received $900,000 from the settlement.

• United States ex rel. Joyce v. Global Office Furniture, LLC, Case No. 20-cv-01223 (D.S.C.): In July 2025, the DOJ filed suit against an importer in South Carolina for colluding with a manufacturer to undervalue imports of office furniture between 2019 and 2023. The DOJ alleged that Global Office Furniture, LLC used a double-invoicing scheme, with their manufacturer’s knowledge, to submit false entry summary documentation to undervalue their imports. After the defendants were informed that the government was investigating their fraudulent scheme, they attempted to destroy evidence of their actions.

• United States ex rel. Melinda Hemphill v. Allied Stone Inc.,Case No. 21-cv-02955 (N.D. Tex.): In August 2025, the DOJ settled for $12.4 million with Allied Stone and its president for knowingly evading antidumping and countervailing duties on Chinese quartz surface products imported between 2018 and 2023. The complaint alleged that Allied Stone’s president misrepresented Chinese quartz products as marble or glass to avoid duties. The qui tam relator who filed the suit received over $2 million from the settlement.
  2026 Settlements 

2026 Settlements

The DOJ’s 2025 FCA enforcement momentum has carried over into the first half of 2026, with three major settlements signaling continued aggressive pursuit of customs fraud.

• United States ex rel. Rapport v. PengCheng Aluminum Enterprise Inc.,Case No. 15-cv-00712 (C.D. Cal.): In May, California-based Perfectus Aluminum Inc., Perfectus Aluminum Acquisitions LLC, and four affiliated warehousing companies reached a record-breaking settlement of $549.5 million to resolve allegations of knowingly and improperly evading, or conspiring to evade, antidumping and countervailing duties on aluminum extrusions from China. The DOJ alleges that from July 2011 to June 2014, the companies claimed that more than 2.2 million aluminum extrusion pallets were finished merchandise when, in reality, the pallets were spot-welded together to appear as functional pallets. There were no customers for these pallets, nor were any pallets sold during the 2011 through 2014 period. The qui tam relator will receive 17.5% of the settlement.

• United States ex rel. Dhala v. Royal Canadian Steel Inc., Case No. 23-cv-12097 (E.D. Mich.): In May, two Canadian-based steel companies, Farjess Inc. and Royal Canadian Steel, Inc., reached a settlement of $19 million over allegations of failing to pay duties on flat-rolled steel manufactured in Europe and Asia. The settlement alleges that between 2019 and 2025, the companies knowingly misrepresented the country of origin as Canada or the United States when the true origin was China, Indonesia, Italy, Turkey, and Vietnam. The qui tam relator received $3.6 million of the settlement proceeds.

• United States ex rel. Maierhoffer v. New York Packaging II LLC d/b/a Redi-Bag USA, Case No. 21-cv-20170 (D.N.J.): In July, New York-based Redi-Bag USA and its CEO, Jeffrey Rabiea, reached a settlement of $7.3 million to resolve allegations of knowingly evading antidumping duties on polyethylene retail carrier bags (PRCBs) manufactured in China. The DOJ alleged that from 2011 through 2021, Redi-Bag USA and its CEO transshipped PRCBs through Hong Kong and misrepresented Hong Kong as the country of origin on customs entry forms to evade antidumping duties of up to 77.57%. The government further alleged that the defendants concealed the true origin by directing employees to cover up “Made in China” markings, instructing the manufacturer to remove such markings, and canceling orders after learning they would be inspected by customs authorities. The qui tam relator, a former contracted sales representative for Redi-Bag USA, received approximately $1.33 million of the settlement proceeds.

The Trade Fraud Task Force: A ‘Fundamental Shift’ in Enforcement

FCA enforcement has reached unprecedented levels. In fiscal year 2025, the DOJ secured $6.8 billion in FCA settlements and judgments — a single-year record in the statute’s 160-year history. Whistleblowers filed a record 1,297 qui tam lawsuits, and the government opened over 400 investigations. Historically, the DOJ did not typically invoke the FCA in trade fraud cases. That is changing rapidly, driven in part by President Trump’s “America First Trade Policy” announced on Inauguration Day and the TFTF established in August 2025.

On July 14, the DOJ — together with the US Department of Homeland Security (DHS) and CBP — announced that the TFTF has surpassed $1 billion in combined criminal and civil recoveries, penalties, forfeitures, and charged losses in approximately 10 months of operation (see our alert here). The DOJ simultaneously announced the permanent establishment of a new Global Trade and Commerce Enforcement Section within the Fraud Division, which will serve as the Department’s dedicated “front door” for criminal trade and customs fraud enforcement. The new section’s mandate covers revenue evasion, forced labor and global supply chain violations, health and safety violations, and trade-based money laundering.

Alongside these announcements, the DOJ and DHS released a comprehensive “Resource Guide to Trade Fraud Enforcement” (see here) outlining common fraud typologies, how the government evaluates supply chain integrity, and a roadmap for preventing and remediating customs violations. The guide signals the government’s intent to provide clear notice of enforcement expectations, while simultaneously removing any claim of ignorance as a defense.

Enforcement Strategy and Priorities 

The TFTF employs a multi-pronged enforcement strategy: duty and penalty collection under the Tariff Act of 1930, civil enforcement through the FCA, and criminal prosecutions, forfeitures, and seizures under Title 18’s trade fraud and conspiracy provisions. By integrating these authorities under a single body, the government can bring simultaneous or sequential civil and criminal actions against the same conduct.

Senior DOJ officials have emphasized the focus on customs enforcement. In May 2025, the DOJ’s Criminal Division released a memorandum establishing new white-collar enforcement priorities, singling out trade and customs fraud — including tariff evasion — as a key area of focus. The memorandum characterized customs fraud as a threat to the nation’s economy, the competitiveness of American businesses, and national security.

That message was reinforced in February, when Cody Matthew Herche, senior counsel in the DOJ’s Criminal Division and newly appointed head of the TFTF, delivered a keynote address at the International Trade Investigations, Enforcement & Litigation conference. In his first public remarks, Herche declared that the government’s approach to trade fraud enforcement is undergoing a “fundamental shift,” outlining four pillars: heightened individual accountability, expanded inter-agency collaboration, data-driven lead generation, and parallel civil and criminal proceedings.

Individual Accountability and Parallel Proceedings 

Individual accountability was a central theme. Herche observed that corporations act through individuals, and where an importer cuts corners on duty obligations, a specific person directed that conduct. He cited Global Plastics as an example. While the corporate entities settled their civil FCA liability, the former CEO separately pleaded guilty to conspiracy to smuggle goods into the United States under 18 U.S.C. § 545.

The TFTF’s structure facilitates simultaneous civil and criminal proceedings against the same conduct. This dual-track approach maximizes enforcement leverage and compounds legal, financial, and reputational risks for both companies and individuals.

Cross-Agency Coordination and Data-Driven Enforcement

The DOJ’s strategy also reflects expanded partnerships across the federal regulatory landscape. Through the TFTF, the DOJ has deepened coordination with agencies overseeing product safety and environmental compliance, including the US Food and Drug Administration, US Environmental Protection Agency, and Consumer Product Safety Commission. These partnerships recognize that tariff evasion schemes frequently implicate other regulatory requirements — and enforcement will not be siloed.

Herche stated directly that schemes to evade tariffs will not be assessed in isolation. Where fraud circumvents other regulatory programs — whether involving product safety, environmental standards, or labeling requirements — the government intends to pursue accountability across all implicated regimes.

Data analytics is another critical element. Herche indicated that the TFTF is refining data-driven techniques to detect anomalies in import patterns that may signal evasion. Investigators are scrutinizing shifts in trade data inconsistent with established logistics patterns that may suggest false information was submitted to customs authorities.

The TFTF has developed what Herche described as a “continuous feedback loop” connecting data-generated leads to actionable investigations. This allows the government to proactively identify fraud targets rather than relying solely on whistleblower complaints or agency referrals. Herche also noted that expansive venue provisions under 18 U.S.C. § 3237 give the TFTF broad geographic flexibility, enabling collaboration with US Attorneys’ Offices in any federal district from, through, or into which the goods or persons at issue have moved.

Key Takeaways and Practical Recommendations for Importers

With the TFTF operational, record qui tam filings, data-driven investigations, and a stated commitment to individual prosecution, the customs enforcement landscape has fundamentally shifted. Importers who fail to proactively assess their compliance face exposure not only to treble damages and per-claim penalties, but also to parallel criminal proceedings and reputational harm. Given the unprecedented enforcement environment, importers should consider the following precautionary steps to assess and mitigate their FCA exposure.

• Expect increased enforcement actions. Enforcement actions are expected to increase significantly over the next several years — not only in the number of cases but also in the size of settlement amounts. This trend will be driven by heightened institutional funding, increased scrutiny, and greater prioritization of customs enforcement, all of which will work together to drive up both volume and dollar amounts.

• Anticipate heightened scrutiny through administrative requests. Increased scrutiny may come through CF-28s and CF-29s. Importers should expect greater scrutiny from CBP across the board, regardless of whether a particular importer is a direct target of an enforcement action.

• Be aware of sector-specific risks — steel, copper, and aluminum. Importers of steel, copper, and aluminum should be vigilant on ensuring their declarations regarding Section 232 duties is accurate, given the Trump Administration’s stated policy of enforcing violations surrounding these duties. 

• Recognize that there is no one-size-fits-all enforcement approach. Enforcement cases vary widely in type and mechanism. Scrutiny is not limited to antidumping and countervailing duty matters. Any declaration made to the government may be subject to heightened review, including tariff classification, country of origin, Section 232 duties, and other customs-related representations.

• Conduct periodic review of entries. Companies should conduct periodic reviews of past entries to ensure accurate country-of-origin declarations, tariff classifications, valuation, and other required representations across their import portfolio. Identify entries that may be vulnerable to challenge, particularly those involving goods from countries subject to antidumping and countervailing duty orders or additional tariffs. False statements in any of these areas can serve as the basis for a “reverse false claim” if the false statement leads to the importer avoiding its obligation to pay the appropriate duties.

• Consider voluntary self-disclosure. The MGI International case demonstrates that voluntary self-disclosure can result in disciplinary leniency. The DOJ consistently emphasizes that cooperation and self-disclosure are crucial to avoiding maximum penalties. 

• Assess whistleblower risk. With record qui tam filings and large settlement recovery incentives, companies should evaluate internal compliance culture and ensure employees understand reporting obligations. Document compliance efforts, as they may serve as evidence negating the FCA’s knowledge element.

Additional research and writing from Isabella Wellinghorst, a 2026 summer associate in ArentFox Schiff’s Washington, DC, office and a law student at American University Washington College of Law.