Customs and tariff enforcement and the increased risk of criminal prosecutions: Key takeaways

Key points

Trade fraud and the enforcement of tariffs have become top priorities under the Trump Administration’s “America First” policy and the United States Department of Justice (DOJ) Criminal Division’s White Collar Enforcement Plan. This alert examines:

• DOJ’s use of wire fraud and criminal conspiracy charges to enforce customs fraud and tariff evasion
  
  
• Four recent examples in which DOJ invoked wire fraud and/or conspiracy charges to criminally prosecute schemes to avoid or evade import duties, and
  
  
• Recommendations for how companies can best navigate the current environment, including discussion of proactive risk assessments, quality control for internal controls, revisiting training modules, ensuring accuracy in government filings, formalizing processes for addressing red flags, developing policies to handle whistleblower reports appropriately, and engaging counsel when issues are identified.

Introduction

As the US Department of Homeland Security (DHS) continues its enforcement of civil customs violations, DOJ’s Criminal Division has expressly identified “trade and customs fraud, including tariff evasion” as a high‑impact focus area, and has reorganized to concentrate resources on investigating and prosecuting complex import‑related schemes.

In parallel, DOJ and DHS launched a cross‑agency Trade Fraud Task Force to pursue both civil and criminal actions – including through traditional customs enforcement statutes as well as civil False Claims Act (FCA) theories of liability and criminal fraud and conspiracy offenses – to protect US industries and tariff revenues.

Further, on January 16, 2026, Congress passed an appropriations package for DOJ that allocates an additional $2 million in funding specifically for the Trade Fraud Task Force, indicating that the task force will remain a key DOJ enforcement mechanism in 2026.

In this alert, we discuss recent DOJ actions leveraging wire fraud and conspiracy statutes and provide key takeaways.

Background on conspiracy and wire fraud enforcement

Historically, companies have largely focused on potential regulatory enforcement of trade laws by DHS Customs and Border Protection (CBP). These investigations, often alleging violations such as tariff evasion or customs fraud under 19 USC § 1952, have sometimes led to significant financial penalties, but they have rarely included a criminal component.

However, in applying this new policy framework, DOJ has increasingly leveraged wire fraud statutes, including conspiracy (18 U.S.C. § 371 and 18 U.S.C. § 1349) and wire fraud (18 U.S.C. § 1343), as versatile charging tools to capture multi‑jurisdictional duty‑evasion schemes involving electronic communications, invoicing, certifications, and payment flows.

Conspiracy requires an agreement to commit an offense or to defraud another party (including the US). Proving wire fraud requires evidence of (1) voluntarily and intentionally devising or participating in a scheme to defraud, (2) with the intent to defraud, and (3) the use of interstate wire communications (e.g., email, phone, or banking transactions).

Prosecutors may use conspiracy and wire fraud charges to attach serious criminal liability and the risk of substantial sentences to broader customs cases, as nearly every customs matter involves wire or electronic communications, including cross-border wire payments. These criminal charges carry a maximum of 20 years in prison and fines of either (1) $250,000 for individuals or (2) the greater of $500,000 or twice the gain or loss from the offense for corporate entities.

Although conspiracy and wire fraud can be sufficient alone to charge conduct related to trade fraud and tariff evasion (as shown by the cases discussed below), wire fraud charges often run in parallel with:

• Trade‑specific import offenses (18 U.S.C. §§ 542, 545)
• False statements (18 U.S.C. § 1001)
• Smuggling charges, and
• In applicable cases, civil FCA claims based on “reverse false claims” theories of liability premised on avoiding amounts owed to the government.

These enforcement tools are key elements of the DOJ Criminal Division’s White Collar Enforcement Plan; the newly organized Market, Government, and Consumer Fraud Unit in DOJ’s Criminal Division Fraud Section; and the Trade Fraud Task Force – all of which focus on trade fraud and tariff evasion enforcement, executive accountability, forfeiture, data analytics, and interagency coordination with related law enforcement initiatives involving CBP, the Internal Revenue Service Criminal Investigation (IRS-CI), and Homeland Security Investigations (HSI).

These cross-agency initiatives demonstrate that US authorities may leverage both civil and criminal investigative capabilities to build cases against importers using both traditional customs liability frameworks (e.g., 19 U.S.C. § 1592) and other more serious theories of civil and criminal liability.

As part of this coordinated enforcement priority, DOJ’s use of wire fraud theories in duty and tariff evasion matters may reflect a potential strategy: Wire fraud and conspiracy to commit wire fraud provide broad jurisdictional reach, significant penalties, and flexibility to capture trade-related misconduct, especially by foreign companies and individuals.

US jurisdiction can arise via electronic certifications, email correspondence, bidding communications, invoicing, logistics coordination, and payment transmissions initiated by either US importers or non-US companies to operationalize trade‑evasion schemes. CBP has collected significant amounts of data from importers throughout the normal course of their business. The DOJ Criminal Division Fraud Section uses data analytics to identify anomalies in similar contexts such as healthcare fraud and has publicly expressed an intent to apply those same strategies in trade fraud cases.

While wire fraud represents one of many potential civil and criminal enforcement tools at prosecutors’ disposal to enforce US trade laws, the result is an enforcement environment that pairs broad criminal fraud theories with trade‑specific offenses and forfeiture. In other words, “customs irregularities” could be treated as potential felony fraud when paired with at least one interstate or cross-border communication.

Recent trade cases leveraging wire fraud and conspiracy statutes

Four recent criminal cases brought by DOJ have invoked wire fraud and/or conspiracy charges in relation to schemes to avoid or evade import duties, demonstrating that these statutes are – and may continue to be – a key enforcement tool widely applicable to trade fraud cases.

Trade fraud resolution involving plastic resin distributor

On December 19, 2025, DOJ announced a resolution of a criminal trade fraud investigation into a US plastic resin distributor and its US subsidiaries regarding their scheme to falsify country-of-origin declarations and avoid Section 301 duties on products of Chinese origin. Under this resolution, which falls under Part I of the Criminal Division’s Corporate Enforcement and Voluntary Self Disclosure Policy, DOJ declined to prosecute the companies and credited them $6.8 million – the amount they had previously paid to resolve their civil liability under the FCA for knowingly failing to pay customs duties on certain plastic resin imports from China. DOJ explained that the declination reflected factors including the distributor’s timely and voluntary self disclosure; full and proactive cooperation; the nature and seriousness of the offense; and timely remediation, such as disciplinary actions, root cause analysis, and compliance program enhancements. The resolution was coordinated through the Trade Fraud Task Force, highlighting the cross agency approach to tariff evasion and smuggling schemes.

In a parallel individual action, the resin distributor’s former Chief Operating Officer agreed to plead guilty to conspiracy to smuggle goods into the US after directing subordinates to misrepresent the manufacturer and country of origin on CBP paperwork in an effort to avoid Section 301 duties. The executive faces a maximum penalty of five years’ imprisonment. DOJ emphasized that this pairing – corporate declination with credit for prior civil payment and cooperation, alongside an individual guilty plea – demonstrates the Criminal Division’s focus on both corporate cooperation and remediation incentives and individual accountability in trade fraud matters.

The settlement further underscores the scope of the misconduct addressed through remediation: The subsidiaries admitted to conduct involving misrepresentations of manufacturer and country of origin (e.g., declaring Taiwan, Saudi Arabia, or the US rather than China to avoid Section 301 duties); failures to properly mark imports, resulting in marking duties; and undervaluation of merchandise to reduce duty liability, covering shipments from May 17, 2019 through January 9, 2025. The companies’ cooperation included timely self disclosures to CBP beginning in May 2024; a voluntary disclosure to the US Attorney’s Office for the District of New Hampshire in November 2024; an internal investigation; disclosure of relevant facts; a damages analysis shared with the government; and compliance enhancements, which DOJ credited in the civil resolution and in the criminal declination analysis. HSI led the criminal investigation, and DOJ stated the matter exemplifies how the Trade Fraud Task Force leverages coordinated tools across the DOJ to combat duty evasion schemes and protect the public fisc.

Allegations of fraudulent forklift sales to government buyers

According to an August 21, 2025 indictment unsealed in the District of Colorado and related DOJ press release, DOJ leveraged criminal wire fraud statutes to charge two Colorado companies and three executives in connection with fraudulently importing Chinese forklifts by disguising their origin, evading tariffs through undervaluation, and selling them to US government agencies as “Made in the USA.”

The indictment alleges that, between 2018 and 2024, the defendants purchased forklifts from a Chinese manufacturer, rebranded them, and falsely represented in System for Award Management (SAM) certifications and to government contracting officers that the forklifts were manufactured in the US and compliant with the Buy American Act and Trade Agreements Act. The government alleges that the defendants took steps to conceal the forklifts’ Chinese origin by directing Chinese suppliers to affix English data plates depicting the American flag and claiming final assembly in Denver, removing Chinese markings and inspection tags before delivery, providing fraudulent Manufacturer’s Certificates of Origin, and describing the forklifts as US‑made in bids and communications. The indictment further alleges that defendants and a Chinese co‑conspirator agreed to submit false commercial invoices valuing the forklifts and parts at roughly 70 percent of actual cost for customs entry, which purportedly deprived the US of more than $1 million in tariffs, duties, and fees. The scheme used interstate and foreign wire communications to place orders, transmit payments, and submit electronic invoices to federal systems (e.g., Wide Area Workflow).

The indictment pairs wire fraud charges with trade-specific offenses, false statements, and procurement-related theories of criminal fraud. Specifically, both the corporate and individual defendants are charged with conspiring to commit wire fraud in violation of 18 U.S.C. § 1349, with additional substantive wire fraud counts (18 U.S.C. § 1343) against the individuals. DOJ also charged the defendants with conspiring to import goods by means of false or fraudulent statements (18 U.S.C. § 371) and for making false statements to the government (18 U.S.C. § 1001) based on SAM certifications attesting to compliance with the Buy American Act and Trade Agreements Act. The indictment also includes forfeiture allegations under 18 U.S.C. §§ 981(a)(1)(C) and 982(a)(2)(B), signaling DOJ’s intent to pursue proceeds tied to the fraudulent conduct.

Alleged conspiracy to commit wire fraud to evade duties and new tariffs for Indonesian jewelry imports

According to another criminal complaint filed on November 12, 2025, an Indonesian jewelry manufacturer and three employees were charged in the District of New Jersey with one count of conspiracy to commit wire fraud in connection with trade-related misconduct. The government alleges a multi‑year scheme to avoid more than $86.4 million in duties and tariffs, tied to more than $1.2 billion of jewelry shipped into the US from 2021 through October 2025. The complaint describes two related evasion tactics:

• First, after the expiration of Indonesia’s duty‑free treatment under the Generalized System of Preferences (GSP) program on December 31, 2020, the defendants allegedly routed Indonesian‑manufactured jewelry through Jordan. Then, they falsely declared Jordan as the country of origin to eliminate duties otherwise applicable to Indonesian‑origin jewelry. Customers continued to order from, negotiate with, and coordinate production with company personnel, and the company generated pro forma invoices that included the language “MADE IN INDONESIA,” which were followed by Jordanian invoices falsely certifying Jordanian manufacture before the products were imported into the US.
  
  
• Second, after the US imposed additional tariffs in 2025 on imports from Indonesia and Jordan, the defendants and co‑conspirators allegedly devised a new pathway: US scrap gold was shipped to Jordan under labels such as “Unfinished Gold chains to be assembled” and “Made in USA,” swapped for jewelry manufactured in Indonesia, and then shipped into the US accompanied by paperwork that falsely certified that the products were of US origin. The government also alleges additional steps taken by the defendants to support US-origin claims, such as removing “Made in Jordan” stamps. CBP inspections reportedly revealed scrap‑like material outbound and finished jewelry inbound, with documentation linking the shipments and claims of US origin. The complaint cites emails; recordings of discussions about the evasion scheme among the defendants; and CBP broker communications warning that the approach would not be verifiable and would trigger “substantial transformation” issues, suggesting fairly detailed knowledge of the customs rules. However, the conduct allegedly continued.

The complaint alleges that the defendants periodically discussed the schemes via interstate and foreign email and encrypted messaging applications – including in emails with customers and via shipping documentation and invoices sent to and from the US, which afforded DOJ sufficient jurisdiction to bring charges against these foreign defendants. As noted above, the charging documents allege more than $1.2 billion worth of shipments and more than $86.4 million in avoided duties and tariffs between 2021 and October 2025. The complaint charges conspiracy to commit wire fraud in violation of 18 U.S.C. § 1349, premised on a scheme to obtain money and property (duty and tariff savings) through materially false representations made in interstate and foreign wire communications in connection with the conduct described above. The DOJ press release for the case notes the participation of CBP, HSI, and IRS-CI teams, highlighting the multi‑agency resources and coordination typical of trade fraud cases.

Alleged evasion of anti-dumping and countervailing duties on Chinese quartz, tile, and cabinetry imports

In December 2025, a federal grand jury in the Northern District of California indicted three individuals and three companies on multiple criminal charges, including wire fraud, relating to a scheme to evade more than $109 million in duties owed on approximately 520 shipments of kitchen products imported from China that were subject to anti-dumping and countervailing duty (AD/CVD duties). This criminal action arose from a coordinated effort involving DOJ’s Trade Fraud Task Force, the US Attorney’s Office for the Northern District of California, CBP, and DHS-HSI and runs in parallel with separate administrative proceedings that CBP is currently pursuing.

The indictment alleges that, between September 2018 and August 2023, the defendants used techniques to avoid paying AD/CVD duties and other customs duties – and increase their own profitability – by transshipping kitchen and bath construction and remodeling products through Malaysia, using shell companies, and misclassifying the products. The products in question consisted of quartz surface products, ceramic tiles, and wooden cabinets and vanities manufactured in China and subject to combination rates.

As part of the scheme, a US national allegedly arranged with a Chinese logistics company to transship products on behalf of his California-based companies to avoid paying AD/CVD duties, despite knowing that many of the imports were subject to such duties. In facilitating this transshipment, the Chinese logistics company helped the California-based importers by fraudulently transshipping the Chinese-manufactured goods to Malaysia, re-exporting them from Malaysia to the Port of Oakland, and then falsely claiming on import documentation that the products were manufactured in Malaysia. The defendants communicated about the transshipment scheme via email and paid the logistics company from a US-based bank account.

The indictment further alleges that the defendants – including the defendant’s customs broker, a US national – facilitated this scheme by submitting false statements about the country of origin, export country, declared duties owed, and included products on entry summaries. Entry documents also falsely identified various shell companies as the US-based importers and recipients of the goods, while the true importers were the defendant and his California-based companies.

In connection with this scheme, the indictment charges all defendants with conspiracy, conspiracy to commit wire fraud, wire fraud, smuggling, and entry of goods by means of false statements. The government is seeking forfeiture of the fraudulently imported products. In addition to these charges, the US importers are charged with international money laundering in connection with money transfers from US bank accounts to relevant accounts in China and elsewhere outside the US. Simultaneously, CBP issued a pre-penalty notice for approximately $222.5 million, reflecting CBP’s preliminary finding that the parties fraudulently entered goods into the US by means of false statements in violation of 19 U.S.C. § 1592. Both the administrative action and criminal case are ongoing.

Takeaways

To navigate this complex and evolving environment, companies may consider the following actions to help mitigate enforcement risks:

• Initiate proactive risk assessments. Establish an end‑to‑end import compliance risk assessment anchored in four pillars (classification, valuation, country of origin, and claim for preferential duty treatment); test high‑risk lanes and counterparties; and validate that documentation, invoicing, and declarations align with underlying commercial reality. Given the risk of regulatory or criminal investigation, consider conducting those assessments under legal privilege.
  
  
• Initiate quality control for internal controls. Rigorously manage country‑of‑origin and “substantial transformation” determinations, especially where production steps span multiple jurisdictions, and document bills of materials and manufacturing steps. Avoid transshipment practices that merely relabel goods or perform minimal processing before US entry (or otherwise closely monitor origin declarations). Implement processes and procedures for determining and documenting declarations, including country of origin, classification, and valuation. Also consider strengthening valuation controls and three‑way matches among key documentation (purchase orders, commercial invoices, and customs entry documents) to scrutinize any “service charges,” rebates, or side agreements that could mask undervaluation or non‑arm’s‑length pricing. Targeted analytics may also be deployed to flag anomalies in Harmonized Tariff Schedule codes, declared values, vendor invoices, routings, or shifts in country of origin.
  
  
• Revisit training modules. Enhance training for procurement, logistics, trade compliance, and government sales personnel on tariff regimes, origin rules, valuation principles, and certification obligations, as well as tie training to disciplinary frameworks to reinforce accountability.
  
  
• Ensure accuracy in government filings. Calibrate certifications to the actual supply chain; tightly control representations made in export and import filings, as well as in any government-related bidding and marketing materials; and implement steps to verify origin, content, and valuation information.
  
  
• Address red flags. Formalize escalation and investigation pathways under privilege when red flags arise (e.g., requests for alternative invoicing values, new suppliers that appear to be shell companies, add‑on “documentation services,” or sudden routing changes through low‑tariff jurisdictions, among others).
  
  
• Take whistleblower reports seriously. With the expansion of the DOJ Criminal Division’s Corporate Whistleblower Awards Pilot Program to include tips about trade, tariff, and customs fraud by corporations, both external and internal whistleblower reports may increase. Prepare for whistleblower‑driven scrutiny by testing hotline responsiveness, anti‑retaliation controls, and investigation timeliness. Investigate reports promptly, document findings, and implement remedial actions as appropriate. Escalate complaints appropriately to ensure that high-risk issues are analyzed under legal privilege protections. Establish policies preventing retaliation for whistleblowing or impeding reporting of wrongdoing and confirm that these policies are meaningful and effective.
  
  
• Engage counsel when issues are identified. External counsel with an understanding of how criminal laws intersect with trade issues can help determine how the regulatory investigative process intersects with criminal exposure, the costs and benefits of voluntary self‑disclosure under DOJ policies, and how to effectively manage ongoing civil risks. Preservation of evidence, immediate remediation, and cooperation may materially affect charging decisions, penalty outcomes, and the imposition or scope of compliance obligations and external monitorships.

For more information, please contact the authors.