Trade Fraud Is Now a Top DOJ Enforcement Priority: What Your Company Needs to Know

Assistant U.S. Attorney General Colin McDonald, the head of the U.S. Department of Justice's (DOJ) new National Fraud Enforcement Division, identified "global trade and commerce" as a top enforcement priority through a memorandum on August 13, 2026. The announcement reflects a broader shift in customs enforcement: Conduct once addressed primarily through U.S. Customs and Border Protection (CBP) requests, duty assessments and administrative penalties may now draw coordinated scrutiny from federal prosecutors, civil fraud attorneys and False Claims Act (FCA) relators.

For further analysis on trends in trade enforcement, see Holland & Knight's previous alert, "New DOJ-DHS Trade Enforcement Guidance: What Companies Need to Know," August 10, 2026, and recent webinar, "Trade Fraud and Customs Enforcement: What Companies Need to Know," September 16, 2026.

The New Priority Targets

Mr. McDonald, in his August 13 memorandum, emphasized that "When corporations or individuals engage in trade fraud and customs evasion, they undermine American industry, deprive the public fisc of vital external revenue, fund foreign adversaries, and compromise our national values." He also identified "systemic, high-impact noncompliance" as an enforcement focus, including:

• Illicit Transshipment. Routing goods through a third country (often in Southeast Asia or Mexico) to disguise their true origin and avoid Section 301, antidumping or countervailing duties
• Country-of-Origin Fraud. Declaring an origin that does not reflect where the goods were substantially transformed, including minor assembly or relabeling operations designed to manufacture a lower-duty origin
• Undervaluation. Understating the price actually paid or payable, including through double invoicing, undeclared assists, unreported royalties or related-party pricing that does not reflect an arm's-length transaction
• Sanctions Evasion. Sourcing from or through sanctioned parties, a theme that increasingly overlaps with export controls enforcement
• Forced Labor. Importing goods made in whole or in part with forced labor, including goods covered by the Uyghur Forced Labor Prevention Act's rebuttable presumption

Misclassification is not on that list by name, but it is often the foundation for enforcement actions. Companies should expect prosecutors to treat a pattern of knowingly incorrect tariff classifications the same way they treat false statements about origin or value. Although the most serious civil and criminal cases will generally involve evidence of knowledge or intent, 19 U.S. Code § 1592 – Penalties for Fraud, Gross Negligence and Negligence – also authorizes civil penalties for violations resulting from gross negligence or negligence.

The DOJ's focus on "systemic, high-impact" conduct is also an indicator: DOJ is looking for patterns of conduct, including multiyear schemes, large duty losses and conduct that suggests the company knew the declarations were wrong. Today's tariff environment, with stacked Section 232, Section 301 and other duties reaching well above historical norms on many products, makes the economic incentive to evade and, therefore, DOJ's interest, greater than at any point in modern memory.

Trade Fraud Task Force: The Tip of the Spear for Enforcement

The DOJ's new priority builds on the cross-agency Trade Fraud Task Force (TFTF), which DOJ launched with the U.S. Department of Homeland Security on August 29, 2025. DOJ announced that it would pursue alleged violators through duty and penalty collection actions under the Tariff Act of 1930, FCA and "wherever appropriate, parallel criminal prosecutions, penalties, and seizures." DOJ has also published a Trade Fraud Enforcement Resource Guide describing the principal civil and criminal authorities available to address customs and trade fraud.

The results have come quickly. In July 2026, DOJ announced that, in less than one year, the TFTF had surpassed $1 billion in civil and criminal recoveries, penalties, forfeitures and publicly charged losses. DOJ referred to this as a "fundamental shift in the federal government's approach to customs and trade enforcement, emphasizing rigorous criminal prosecution and civil enforcement under the False Claims Act."

The TFTF's real significance is coordination. Historically, the agencies that police trade fraud worked largely in separate lanes. CBP audited entries and issued penalty notices; Homeland Security Investigations (HSI) pursued smuggling-type cases. DOJ's Civil Division litigated Section 1592 penalty actions and FCA cases, while U.S. attorney's offices brought criminal charges. A matter could sit with one office for years before another learned of it. The TFTF brings these stakeholders together so that CBP's entry data, HSI's investigative work, civil fraud attorneys and prosecutors can evaluate the same conduct at the same time and choose the most effective – or severe – combination of remedies. For companies, that means a Customs Form 28 or penalty notice can no longer be treated as a purely administrative matter because the information produced in response may be shared with all government stakeholders. And because each enforcement tool has its own forum, standard of proof, limitations period and remedies, a company that understands only one of them could misjudge its exposure.

Where to Watch: Available Government Enforcement Mechanisms

A summary of the available government enforcement mechanisms is below:

As noted above, the same underlying conduct may therefore be evaluated under different knowledge standards, pursued by different government components or private relators, and subject to materially different remedies.

Three features of this landscape deserve emphasis.

1. FCA liability can be dramatically larger than Section 1592 liability for the same conduct because each false entry can carry its own penalty and damages are trebled.
2. The FCA brings private enforcers into the picture. Many customs FCA cases are filed by competitors, former employees or relator firms that compare import records against market pricing. Those complaints are filed under seal, and DOJ is required to investigate.
3. A prior disclosure filed with CBP is not a voluntary self-disclosure to DOJ. DOJ’s Corporate Enforcement Policy states that disclosures made only to regulatory agencies (such as CBP) generally do not qualify.

How Prosecutors Will Decide Whether to Charge a Company

On October 1, 2026, the Fraud Division issued Directive 26-12 governing principles surrounding corporate enforcement. The Directive identifies fraud schemes relating to "tariff evasion, importation of goods or services, or forced labor" as one of the four priority areas for corporate investigations.

The Directive also instructs prosecutors to "place great weight" on certain factors when deciding whether to charge a company and in negotiating resolutions, including:

• conduct lasting three or more years
• conduct threatening American safety or security
• conduct involving three or more federal districts
• knowledge of or involvement in the scheme by corporate management
• efforts to "conceal fraud from government agencies or auditors"
• conduct involving "the exfiltration of American dollars to support foreign adversaries"

When read against how customs fraud actually happens, these factors are far less demanding than they first appear. Duty evasion is rarely a one-time event: The same incorrect origin, value or classification is typically repeated on every entry until someone catches it, so the three-year threshold is often met by default. Goods entering at one port and distributed nationally can easily touch three districts. A false origin declaration is, by its nature, a statement made to a government agency, and schemes built on shell importers or false invoices are, by design, attempts to conceal.

In other words, a sustained transshipment scheme involving concealment or management participation may implicate several of these factors at once.

The Directive also notes that the Fraud Division is using data analytics through the National Fraud Detection Center to generate leads and open investigations "at a rapid pace." Entry data is highly structured and well suited to that kind of analysis. Sudden shifts in declared origin after a tariff increase, unit values far below market and new suppliers in transshipment hubs are among the types of anomalies that data analytics may identify.

Finally, the Directive directs Fraud Division leaders to design programs that "incentivize whistleblowers," including those who took part in the misconduct.

A Recent Example: Government Files Suit Against Uni Tile & Marble Inc.

On September 28, 2026, the government filed suit against Uni-Tile & Marble Inc. and its CEO, seeking to recover $67.9 million in unpaid customs duties and $222.5 million in fraud penalties. The government alleges that the defendants "fraudulently transshipped, undervalued, and misdescribed merchandise via a scheme that involved multiple shell companies." The government further alleges that as a result of their actions, "defendants made or caused to be made materially false statements and omissions" to CBP and "deprived the United States of lawful duties."

In its press release announcing the lawsuit, Assistant Attorney General Brett Shumate, the head of DOJ's Civil Division, reiterated the government's commitment to enforcing its trade laws: "We will continue to use every enforcement tool at our disposal to ensure that U.S. manufacturers and American workers are competing on a level playing field."

The Uni-Tile case offers several indicators about how DOJ may approach these matters:

• The Penalty Demand Dwarfs the Duties. The government seeks more than three times the unpaid duties in penalties. Under Section 1592, a fraud penalty may reach the domestic value of the merchandise, not just the duty lost. Companies that frame their exposure as "we'll just pay the duties" are underestimating it.
• DOJ Also Filed Suit Against the Company's CEO. The government is pursuing both Uni-Tile and its CEO jointly and severally for all liability. Owners and executives should not assume that the corporate form will shield them from personal exposure.
• Potential Liability Extends Beyond the Importer of Record. The complaint includes an aiding and abetting theory. Section 1592 expressly reaches anyone who aids or abets a violation, which can include customs brokers, freight forwarders, foreign suppliers' U.S. affiliates and the shell entities that appear on entry documents.
• Parallel Proceedings Are the Plan. The government brought this case as an action under 19 U.S.C. § 1592(a), a provision of the Tariff Act, alongside previously announced criminal charges. This decision illustrates DOJ's willingness to proceed with parallel enforcement proceedings.
• Whistleblowers Are Encouraged. DOJ is inviting referrals from whistleblowers, including through FCA qui tam suits or DOJ's Corporate Whistleblower Program. FCA violations have the potential to result in penalties and treble damages.
• Cooperation Is Rewarded. The Fraud Division has stated that it will reward companies that voluntarily self-disclose, cooperate and remediate. Directive 26-12 requires prosecutors to follow DOJ's Corporate Enforcement and Voluntary Self-Disclosure Policy.

What Companies Should Do Now

With the government continuing to expend more resources on enforcement of trade laws, companies should not wait for a subpoena. The TFTF has encouraged importers and their agents to thoroughly audit their importing practices, as well as self-disclose and remediate alleged unlawful conduct. Companies are recommended to utilize counsel to conduct privileged internal investigations of their practices now. These reviews should cover, at a minimum, country-of-origin determinations, valuation, tariff classification, antidumping and countervailing duties, Section 301 exposure and forced labor risk in the supply chain. Identifying issues early will allow companies to assess exposure, remediate and determine whether to self-disclose while that option offers the greatest benefit.

Holland & Knight Can Help

Holland & Knight's White Collar Defense and Investigations Team and Trade Fraud Enforcement Defense Team regularly advise companies on trade compliance, internal investigations and government enforcement matters. Please contact the authors to discuss how these developments may affect your business.

Additionally, Holland & Knight will host a webinar, "Trade Fraud and Customs Enforcement: What Companies Need to Know 2.0," on October 28, 2026, to examine the latest developments in U.S. customs enforcement and trade fraud investigations. To attend, please register online.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.