On July 14, 2026, the U.S. Department of Justice (DOJ) announced that its Trade Fraud Task Force, launched just under a year ago, has surpassed $1 billion in civil and criminal recoveries, penalties, forfeitures and publicly charged losses. As Assistant Attorney General Colin McDonald of DOJ’s National Fraud Enforcement Division put it, these enforcement actions represent a fundamental shift in how customs violations should be viewed: they are no longer “a mere surcharge or cost of doing business” but “a serious economic crime.”

Significant New Criminal Trade Fraud Prosecutions

As part of DOJ’s announcement, it highlighted criminal charges against several defendants in the Northern District of Illinois relating to customs duty evasion schemes involving the false declaration of countries of origin for gold jewelry. In one case, the defendants were alleged to have imported some 560 separate entries of gold jewelry that they falsely declared as having been manufactured in Singapore—rather than their true countries of origin in India and United Arab Emirates—to avoid paying approximately $38 million in customs duties. In the other case, the defendants allegedly imported approximately 242 separate entries of gold jewelry that were falsely declared as having been manufactured in Oman or Singapore rather than India or the United Arab Emirates, avoiding approximately $13.6 million in United States customs duties. These cases came on the heels of another case where a former accountant for a gold jewelry exporter in the UAE was sentenced to 10 months in federal prison for conspiring to avoid $1.89 million in United States Customs duties on gold jewelry shipments imported by a suburban Chicago company. 

All three cases involved charges 18 U.S.C. § 542 or 18 U.S.C. § 545, which are two of the primary tools available to federal prosecutors to target customs and trade fraud. The former statute makes it a crime to introduce merchandise to the United States “by means of any fraudulent or false invoice, declaration, affidavit, letter, paper, or by means of any false statement, written or verbal, or by means of any false or fraudulent practice or appliance” or make any “willful act or omission whereby the United States shall or may be deprived of any lawful duties.” Punishment for a violation can be fines and/or up to two years of imprisonment. The latter statute has potentially very broad application, providing in relevant part that:

Whoever fraudulently or knowingly imports or brings into the United States, any merchandise contrary to law, or receives, conceals, buys, sells, or in any manner facilitates the transportation, concealment, or sale of such merchandise after importation, knowing the same to have been imported or brought into the United States contrary to law—

Shall be fined under this title or imprisoned not more than 20 years, or both.

Courts are in agreement that this provision criminalizes the importation of merchandise that violates any federal statute. Moreover, § 545 on its face applies not just to the person or company directly responsible for the merchandise being “contrary to law,” but also anyone in the supply chain who “knows” the merchandise was contrary to law. Both the initial manufacturer (who “sells” the merchandise within the meaning of § 545) and the end customer (who “buys” it) could be liable, as well as anyone who “facilitates” the transportation of sale of the merchandise. Violations of this statute can bear penalties of up to 20 years imprisonment.

Hefty Civil Penalties for Trade-Related False Claims

In addition to these criminal cases, the Trade Fraud Task Force also highlighted several recent civil enforcement actions. In May 2026, some California-based companies agreed to pay a total of $549.5 million to resolve allegations that they violated the False Claims Act by evading customs duties owed on aluminum extrusions imported from China by misrepresenting aluminum extrusions as finished merchandise. Similarly, in December 2025, a North Carolina-based distributor of tungsten carbide products agreed to pay $54.4 million to resolve allegations that it violated the False Claims Act by misrepresenting Chinese-origin products as coming from Taiwan and using the incorrect Harmonized Tariff Schedule code to further reduce the duties owed. A similar False Claims Act resolution in 2025 involved a leading global plastic resin distributor who paid $6.8 million over allegations it had made false country of origin declarations to avoid duties owed on plastic resin imported from China. DOJ emphasized that these actions are just the tip of the iceberg, stressing “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.” 

Compliance in an Era of Heightened Trade Fraud Scrutiny

In light of these previously unprecedented criminal charges and large civil settlements for customs and trade fraud, companies can reasonably be asking themselves: what next? Fortunately, in his first public remarks as head of the Trade Fraud Task Force in February 2026, Criminal Division Senior Counsel Cody Matthew Herche provided some compliance tips. Herche emphasized that companies should look for customs and trade fraud red flags in their supply chains, such as:

• The cost of goods remaining the same despite the imposition of an applicable tariff.
• The preferred country of origin for a good suddenly changing.
• Purchase orders containing information that does not match the data submitted to customs.
• The corporate name of the importer of record changing many times.
• A good being routed through places seemingly unconnected to its origin or destination.

Herche also emphasized the government’s willingness to work with companies that investigate their supply chains and self-report customs non-compliance or develop actionable intelligence about their competitors’ non-compliance.

In addition, on July 14, the DOJ released a Trade Fraud Resource Guide, which it described as an “unprecedented joint undertaking by DOJ and DHS to provide the public, trade and enforcement attorneys and professionals, as well as the business community with detailed information regarding our shared enforcement approach and priorities.” This guide contains useful information on how the customs entry process works, what legal provisions may apply, and the different types of trade fraud that may commonly occur. Companies may find it helpful to understand the background against which customs and trade fraud occurs and to identify potential indicia of non-compliance.

Another way to root out customs and trade non-compliance would be through supply chain audits, which can be used to ensure that a company’s suppliers are supplying accurate information and paying appropriate tariffs. Having an effective compliance program tailored to a company’s significant risks, adequately resourced, and empowered to function effectively is also critical to encourage employees to look for and report customs irregularities and to make sure those reports are thoroughly and carefully investigated when they are made. If customs and trade fraud violations occur (or other types of legal violations, for that matter), an effective compliance program can also influence the government’s view of charging decisions and ultimate penalties. Counsel can help to scope compliance programs and audits to a business’s global footprint, industry and risk profile, and keep them privileged and confidential. 

Less than a year into the Trade Fraud Task Force’s existence, there is still plenty to be learned about its approach to enforcement and the nuances of an effective corporate response. What has already become crystal clear, however, is that customs and trade fraud compliance now presents serious enterprise risks for companies, with potentially significant legal, financial, operational and reputational consequences. Companies can and should prepare for heightened scrutiny in this area.