DOJ Intensifies Trade Fraud Enforcement with Parallel Criminal and Civil Actions

In a significant shift in trade enforcement strategy, the U.S. Department of Justice has demonstrated its commitment to combating customs and trade-related fraud through two major enforcement actions announced on December 18, 2025. These cases highlight the DOJ’s increasing use of both criminal and civil tools to address trade violations, confirming predictions made by legal experts earlier this year.

The parallel enforcement actions represent a notable evolution in how the government handles trade fraud. Historically, such cases were primarily addressed through civil proceedings, but recent developments show criminal components of the DOJ taking a more active role in these investigations.

In the first case, the DOJ’s Criminal Division and the U.S. Attorney’s Office for the District of New Hampshire resolved an investigation into subsidiaries of a major plastic resin distributor. The case centered on deliberate misrepresentations of country of origin to U.S. Customs and Border Protection (CBP) to evade Section 301 duties on Chinese products.

While the DOJ declined to prosecute the distributor and its subsidiaries, the company’s former chief operating officer agreed to plead guilty to conspiracy charges related to smuggling goods into the United States. This criminal resolution followed a July 2025 civil settlement under the False Claims Act (FCA) involving the same underlying conduct.

The distributor’s case demonstrates the significant benefits of voluntary self-disclosure. By proactively reporting violations to authorities, fully cooperating with investigations, and implementing appropriate remediation measures, the company secured a declination of prosecution under the DOJ Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy.

The company provided substantial assistance to investigators, including information about individuals involved in the misconduct and detailed analysis of import records. They also took disciplinary actions against employees, conducted root-cause analysis, and enhanced their compliance program.

Perhaps most notably, the DOJ did not require additional monetary payment beyond the tariffs already repaid in the FCA settlement. The civil settlement terms suggest the DOJ applied a multiplier of 1.5 times single damages—less than the typical double damages sought in FCA cases, reflecting the value placed on voluntary disclosure and cooperation.

In stark contrast, the second announcement on December 18 revealed a $54.4 million civil settlement with a North Carolina-based distributor of tungsten carbide products. This case originated from a qui tam complaint filed in 2022 by an industry insider familiar with Chinese production of tungsten carbide products.

The allegations included transshipping Chinese-manufactured products through Taiwan to avoid Section 301 duties, misclassifying products on the Harmonized Tariff Schedule to evade ad valorem duties, and failing to properly mark imports with their country of origin. Unlike the plastic resin distributor, this company appears to have paid double damages, the standard multiplier in FCA settlements where defendants have not voluntarily disclosed violations.

These simultaneous announcements, along with the conclusion of litigation against an automotive components manufacturer resulting in over $30 million in penalties, signal the DOJ’s comprehensive approach to customs and tariff enforcement.

Industry experts recommend that companies implement robust compliance programs, conduct regular training, and perform thorough due diligence on supply chain partners to mitigate risks. The contrasting outcomes of these cases demonstrate that prompt self-disclosure, full cooperation, and appropriate remediation can significantly reduce both criminal and civil penalties.

The DOJ’s Trade Fraud Task Force, established earlier in 2025, appears to be fulfilling its mandate by coordinating enforcement efforts across agencies and dedicating substantial resources to identifying and prosecuting trade-related fraud. Companies engaged in international trade should take note of this enforcement trend and evaluate their compliance programs accordingly.

As global supply chains face increasing scrutiny, these cases highlight the potential consequences of evading trade duties and the importance of transparency in customs declarations. The DOJ’s dual-track approach to enforcement suggests that both corporate entities and individual executives may face significant legal exposure for trade fraud violations.