Cortney Morgan, Nithya Nagarajan, Todd Gee, Cormac Connor, Robert Stang, Emily Mikes and Julia Kopcienski of Husch Blackwell co-authored this report.
A highly specialized and experienced group of DOJ prosecutors who have traditionally focused on financial fraud and market manipulation cases are set to be unleashed on allegations of trade, tariff and customs fraud. A group of authors from law firm Husch Blackwell break down what this means for importers (hint: your risk is increasing).
The DOJ is reportedly reorganizing an office that has historically focused on complex criminal corporate investigations in order to prioritize criminal prosecutions of trade, tariff and customs fraud. These changes will increase scrutiny of import activity by federal prosecutors and investigators, including through the use of powerful criminal investigative tools that tend to be broader and more onerous than traditional requests for information issued by Customs and Border Protection (CBP) or administrative subpoenas issued by Homeland Security Investigations (HSI). Additionally, when DOJ investigations result in criminal charges, the penalties can include potential jail time rather than just the administrative fines, penalties and damages traditionally sought through CBP investigations.
The market integrity and major frauds unit (MIMF), part of the DOJ’s Criminal Division in Washington, D.C., is a highly experienced group of prosecutors that has traditionally focused on complex securities, commodities, procurement and other financial fraud and market manipulation cases. MIMF has a long track record of success in these areas, and it brings some of the DOJ’s largest and most sophisticated prosecutions of corporations and executives. MIMF is especially successful at building these cases through criminal investigations that are parallel to civil or administrative investigations conducted by other agencies, such as the SEC.
According to Bloomberg Law reporting, the DOJ plans to task MIMF with prosecuting companies that evade tariffs, and it will provide resources to fulfill this extra duty through an influx of additional personnel from another part of the DOJ that previously focused on consumer protection. (Bloomberg Law also reports that MIMF will be renamed the “market, government, consumer, fraud unit.”)
These changes are part of a plan announced in May to implement the Criminal Division’s new white-collar and corporate enforcement priorities. The plan cites “trade and customs fraud, including tariff evasion” as an area that prosecutors will “prioritize investigating and prosecuting.” In addition to designating these crimes as a priority, the DOJ updated its corporate whistleblower awards pilot program to specifically include trade, tariff and customs fraud as a subject matter that whistleblowers are now financially incentivized to report.
These changes at the DOJ will increase the potential avenues of risk for importers engaged in practices resulting, either intentionally or unintentionally, in tariff evasion. Considering the Trump Administration’s focus on tariff collections, importers should already be prepared for additional scrutiny by CBP of common customs issues, such as country-of-origin designations, harmonized tariff schedule (HTS) classifications, valuation and eligibility to import under free trade agreements.
Additionally, companies must be aware that private individuals acting as relators may file civil claims under the False Claims Act (FCA) to recover damages, including potential treble damages, for an importer’s false statements to the US government in connection with tariff evasion. Yet these problems may ultimately be minor compared with the challenges posed by DOJ criminal investigations. Moreover, the DOJ can initiate a criminal investigation based on its own sources of information or through events uncovered in a CBP investigation or FCA case, potentially compounding problems faced by importers accused of wrongdoing.
If the newly reorganized MIMF, a US attorney’s office or another component of the DOJ initiates a criminal investigation into trade-related activities, prosecutors and agents will likely employ powerful tools that may be unfamiliar to importers who are accustomed to the less-intrusive methods previously used by CBP. For example, the DOJ may use covert techniques, such as court-authorized search warrants for the contents of email accounts and wiretaps of telephones, to gather evidence of potential crimes long before an importer is even aware of the investigation — sometimes even over the course of months or years.
The DOJ can also use other tools to gather information with or without the importer’s awareness, such as grand jury subpoenas that compel documents and testimony from current and former employees, customs brokers, third-party trade advisors, bankers, accountants and other associates. In general, most internal and external corporate communications can be subpoenaed by the government and are generally not protected under privileges that would bar their disclosure (such as the Fifth Amendment) with the notable exception of communications protected by the attorney-client privilege.
If the DOJ decides to charge an importer for trade-related criminal activity, it has a wide array of criminal statutes that it can use, many of which can lead to prison sentences and fines for companies and executives. Some of these criminal statutes are specific to trade, such as violations of 18 U.S.C. § 541, which allows for fines and up to two years in prison for the “entry of goods … by the payment of less than the amount of duty legally due,” and 18 U.S.C. § 545, which allows for fines and up to 20 years in prison for defrauding the US through “attempts to pass, through the customhouse any false, forged, or fraudulent invoice, or other document or paper.”
Additionally, where an importer has engaged in fraudulent conduct to avoid tariffs, the DOJ may be able to use more general criminal statutes, like the basic wire fraud statute, 18 U.S.C. §1343, which carries a penalty of up to 20 years in prison.
Even before the DOJ’s recent announcements, federal prosecutors periodically brought criminal prosecutions for tariff evasion. For example, in December 2024, the DOJ obtained a guilty plea from a Miami importer for his role in engaging in a conspiracy to smuggle truck tires into the US by means of false and fraudulent invoices presented to CBP that obscured the true country of origin (China) and attempted to further conceal that origin by transshipping the goods through third countries. The scheme resulted in a loss of tariff revenue to the US in excess of $1.9 million. In another case that went to trial last year, a jury convicted a wholesale clothing importer in Los Angeles and two of its executives of a variety of crimes related to their conspiracy to avoid the payment of more than $8 million in customs duties on imported clothing through false information submitted to CBP that understated the true value of the merchandise.
Given the outcome in both these cases, and the substantial prison time and fines the defendants face, importers should guard against similar potential risks as the DOJ enhances its focus on investigating and prosecuting tariff avoidance.
What this means for you
The potential impact on importers and their business associates of the DOJ’s new emphasis on trade-based crimes and the additional resources centralized at MIMF to accomplish this mission cannot be overstated. MIMF has been highly successful at leveraging its experience, resources and tools in securities and other areas of corporate enforcement.
MIMF will likely achieve similar results as it shifts its focus to the trade arena. Even for importers that are ultimately found not to have engaged in a crime, the costs and burdens of a DOJ criminal investigation are extremely high.
Importers can ward off the risks of such an investigation — as well as CBP investigations and tariff-related FCA claims — by taking steps now to ensure they are complying with trade-related laws and regulations and that their employees understand the risks of more general criminal liability schemes like making false statements or engaging in fraudulent activity in connection with trade activity.
Importers are encouraged to conduct a full review of their compliance programs and business activities to ensure they comply with applicable trade-related laws and regulations, including by:
- Confirming those responsible in the organization understand how to accurately classify products under the HTS to assess the proper duty and tariff rates applicable as well as determine the country of origin of products and routinely review the necessary authorities to ensure accuracy.
- Examining valuation methodologies to ensure that products are appropriately valued in conformance with the applicable regulations.
- Examining company procedures for claiming preferential treatment under free trade agreements, such as the United States-Mexico-Canada Agreement (USMCA) and the African Growth Opportunity Act (AGOA), to ensure company products qualify and the necessary supporting documentation is maintained and available.
- Developing or amending written policies and procedures to ensure the company records and reports appropriate customs-related information at all stages of the shipping and importation process.
- Training employees, contractors, shipping companies, and other third parties involved in business activities on the compliance program’s requirements.
- Reviewing supply chain and shipping processes to ensure compliance with country-of-origin marking requirements.
- Evaluating the role of contractors, shipping companies, logistics providers, customs brokers and other third parties in all critical business activities.
