Part 1 of 4 in a series drawn from the Barnes & Thornburg white paper “False Claims Act and Criminal Enforcement in the Tariff Context: Practical Guidance for Companies, Corporations, and Executives”

For years, an importer that misclassified merchandise or declared the wrong country of origin faced an administrative problem. U.S. Customs and Border Protection (CBP) assessed a penalty under Section 1592 of the Tariff Act, the parties negotiated mitigation, and the exposure was measurable against the duties at issue.

That framing no longer describes the risk. Shifting tariff rates, aggressive trade policy, and a reorganized federal enforcement apparatus have made customs compliance a civil fraud and potential criminal liability risk of the first order — one that carries treble damages, per-claim penalties, and, increasingly, personal exposure for the executives who oversee import operations.

The Settlement That Reframed the Analysis

On May 12, 2026, the Department of Justice (DOJ) announced that Perfectus Aluminum Inc. and related companies had agreed to pay $549.5 million to settle False Claims Act allegations. The matter involved more than 2.2 million aluminum extrusions that were spot-welded to appear as functional pallets and misrepresented to CBP as finished goods outside the scope of applicable antidumping and countervailing duty orders. The pallets had no customers and were never sold. The settlement followed guilty verdicts in related criminal proceedings.

It is currently the largest customs-related FCA resolution in the statute's history. The prior record — the $54.4 million Ceratizit USA settlement — had been announced only five months earlier.

Those two are the outliers, but not isolated. Recent resolutions include a $53 million civil penalty against Wanxiang America for misclassifying Chinese automotive components and a $12.4 million settlement with Allied Stone over quartz products declared as marble or crystallized glass, among others.

An Enforcement Apparatus Built for Trade Fraud

The case activity reflects a deliberate restructuring of federal enforcement resources.

The Trade Fraud Task Force, launched jointly by DOJ and the Department of Homeland Security in August 2025, coordinates DOJ's Civil and Criminal Divisions, CBP, and Homeland Security Investigations to pursue tariff- and duty-evasion schemes through the full range of tools — FCA actions, Tariff Act penalties, and criminal prosecutions. That coordination mandate is the structural reason civil and criminal exposure now travel together. In July 2026, the Task Force released "A Resource Guide to Trade Fraud Enforcement," its first comprehensive public guidance, which characterizes trade fraud as "economic predation" that is "effectively stealing from the public treasury."

A dedicated litigating section. DOJ created a National Fraud Enforcement Division in April 2026 and, within it, the Global Trade and Commerce Enforcement Section — the specialized component prosecuting criminal customs fraud, external revenue evasion, and international supply chain forced labor offenses. An August 2026 memorandum identified global trade and commerce as one of the Division's five principal priorities, directing prosecutors to focus on "systemic, high-impact noncompliance that threatens our economic and national security," including illicit transshipment, country-of-origin fraud, and undervaluation designed to evade duties.

Direction from the top. Executive Order 14411, "Strengthening Customs Enforcement," directs CBP to use all available administrative remedies, including enforcing liquidated damages claims against bonds, restricting in-bond utilization, and increasing audits. Separately, DOJ's Criminal Division has designated trade and customs fraud one of 10 "high-impact areas" for white-collar enforcement and instructed prosecutors to "charge and pursue the most serious, readily provable offense" — signaling that tariff evasion may be charged as a felony rather than handled administratively.

Whistleblowers Are the Engine

FCA recoveries exceeded $6.8 billion in fiscal year 2025. Qui tam cases accounted for $5.3 billion of that total and more than three-quarters of all new FCA matters, with whistleblowers filing a record 1,297 suits.

The mechanism is especially potent in customs, where employees, competitors, and industry insiders often hold the specialized knowledge needed to identify an evasion scheme. DOJ has leaned into this, encouraging domestic industries to report suspected violations and expanding its Corporate Whistleblower Awards Pilot Program to cover trade, tariff, and customs fraud. As one DOJ official put it, "domestic industries that are most harmed by unfair trade practices and trade fraud" are a primary source of enforcement leads.

The practical implication: the most likely adversary is not a CBP auditor working through a focused assessment. It is a competitor who believes it is being undercut, or an employee with access to import documentation and pricing data.

Individuals Are in the Frame

DOJ's 2025 Year in Review reported 15 corporate enforcement actions from the Criminal Division's then-Fraud Section, including three corporate indictments — the first since 2010. The unit handling trade fraud prosecutions recorded 62 individual charges and 75 individual convictions.

At a December 2025 industry conference, DOJ's Criminal Division described a "pipeline" of trade fraud cases under investigation, with a "particular focus" on schemes "carried out by or with the knowledge of corporate executives."

Where to Start

The threshold question is narrower than it appears: if a competitor filed a whistleblower complaint about your import practices tomorrow, what would the government find?

Our white paper, “False Claims Act and Criminal Enforcement in the Tariff Context,” works through the bases for FCA and criminal liability, the role of each enforcement agency, the recent cases and what connects them, and the risk mitigation steps companies and executives should be taking now. It includes a model compliance checklist across 11 functional areas — a practical way to assess where a current program stands.