DOJ Trade Fraud Task Force Surpasses $1 Billion in Recoveries; Announces Permanent Enforcement Section

The DOJ simultaneously announced the permanent establishment of a new Global Trade and Commerce Enforcement Section within the Fraud Division, signaling a significant and sustained escalation of federal trade fraud enforcement.

The announcements underscore the federal government’s commitment to treating customs and trade fraud as a top enforcement priority, with clear implications for importers, exporters, downstream purchasers, and the broader supply chain ecosystem.

Key Announcements

• $1 Billion Milestone: The Task Force achieved over $1 billion in combined recoveries, penalties, and forfeitures in approximately 10 months — described by leadership as “a baseline, not a finish line.”

• Permanent Status: The Trade Fraud Task Force has been made a permanent component within the DOJ’s National Fraud Enforcement Division.

• New Litigating Section: The DOJ formally established the “Global Trade and Commerce Enforcement Section” as the department’s dedicated front door for criminal trade and customs fraud enforcement, covering revenue evasion, forced labor and global supply chain violations, health and safety violations, and trade-based money laundering.

• Resource Guide Published: The DOJ and DHS released a comprehensive “Resource Guide to Trade Fraud Enforcement” (see here) outlining fraud typologies, how the government evaluates supply chain integrity, and a roadmap for preventing and remediating customs violations.

Notable Enforcement Actions Cited

• Perfectus Aluminum, Inc.: A $549 million settlement — the largest civil customs settlement in False Claims Act (FCA) history — for knowingly evading duties on 2.2 million aluminum extrusions disguised as pallets.

• Raj Kohli and Veena Kohli: Alleged gold jewelry smuggling and customs fraud scheme involving over $38 million in evaded duties (the case that pushed past the $1 billion milestone).

• Operation Gold Rush: Co-conspirators submitted false statements to CBP claiming over $750 million in gold jewelry imported from India and the UAE; more than $20 million seized.

• Boise Cascade: A $6.3 million criminal fine (twice alleged profit) for Lacey Act violations involving willful blindness toward illegally imported birch plywood — notably, as a downstream buyer, not the importer.

• Canadian Steel Companies (Farjess Inc., Royal Canadian Steel Inc., and their president, Feroz Jessani): A $19 million settlement for FCA allegations of misreporting origins to evade anti-dumping duties.

• Royal Sovereign International: An $8 million criminal fine for willfully failing to report defective imported air conditioners linked to fires, one death, and child injuries.

• Illegal Vape Seizure: An $80 million seizure of illegal vaping products displayed at the press conference.

New Institutional Developments

• Whole-of-Government Coordination: Enforcement involves the DOJ (Fraud Division, Criminal Division, Civil Division, Energy and Natural Resources Division, 30+ US Attorney’s Offices), DHS, Homeland Security Investigations, CBP, the Internal Revenue Services’ Criminal Investigation, the US Environmental Protection Agency’s Criminal Investigation, the US Fish and Wildlife Service, and the US Food and Drug Administration.

• Data-Driven Enforcement: CBP emphasized sophisticated data capabilities to trace the true origin of products, enabling more effective detection of transshipment and origin fraud schemes.

• Whistleblower Emphasis: DOJ officials described whistleblowers as “highly valuable” and emphasized FCA whistleblower provisions and financial incentives for reporting.

• Corporate Enforcement Policy: The DOJ reaffirmed that companies that voluntarily self-disclose, cooperate, and remediate customs violations can secure a declination of prosecution.

Key Takeaways

• Supply Chain Liability Extends Downstream: The DOJ is prosecuting not only importers and brokers, but downstream buyers who display “willful blindness” to the provenance of goods. Companies must conduct meaningful due diligence on sourcing.

• Individual Liability Is Real: The DOJ stressed that corporate structures will not shield executives from personal criminal liability.

• Self-Disclosure Remains Critical: The Corporate Enforcement Policy offers a meaningful pathway to declination for companies that identify issues, self-report, and remediate. Companies should consider whether to avail themselves of voluntary disclosure programs.

• Review Compliance Programs Now: Companies involved in importing, sourcing, or supply chain management should review customs compliance programs, particularly with respect to country-of-origin declarations, anti-dumping and countervailing duty obligations, forced labor restrictions, and consumer product safety reporting.

• Whistleblower Risk Is Elevated: The strong public endorsement of whistleblower incentives increases the likelihood of employee and competitor reporting. Companies should ensure internal reporting mechanisms and prompt investigation of concerns.

• Expect Continued Escalation: With a permanent section, a published enforcement guide, and the $1 billion figure described as a “baseline,” companies should expect intensified enforcement activity in trade fraud for the foreseeable future.

For more information, please contact the authors of this article or your ArentFox Schiff relationship attorney.