Up next for DOJ: Import Fraud
Facing Federal Import Fraud or Customs Evasion Charges
Facing an investigation or charges for import/export fraud or customs evasion can result in serious criminal exposure. Import/export fraud cases often involve tariff fraud and tariff evasion. Fraudulent practices involving customs and tariffs are a key focus of federal investigators and prosecutors, as authorities target activities designed to evade duties and customs regulations.
These investigations are often led by federal law-enforcement agencies, such as U.S. Customs and Border Protection (CBP), Homeland Security Investigations (ICE/HSI), and prosecuted by federal prosecutors. There is currently heightened scrutiny and increased customs fraud enforcement by these agencies, with a focus on detecting and prosecuting violations related to customs duties and trade compliance. These cases are prosecuted under several federal statutes, including:
18 U.S.C. § 541 – False Classification of Imported Goods
18 U.S.C. § 542 – Entry by False Statements
18 U.S.C. § 545 – Smuggling Merchandise into the U.S.
Violations of these statutes may also trigger liability under the False Claims Act, which the government uses as a powerful tool to pursue customs and trade fraud.
Below, we provide a breakdown of the most common federal statutes used in these cases, how these cases are built and prosecuted, potential defenses, and recent enforcement examples. If you are contacted by federal agents or receive a subpoena related to import fraud, contact counsel immediately.
Key Federal Import and Export Fraud Statutes
18 U.S.C. § 541 – False Classification of Imported Goods
Knowingly misclassifying merchandise to reduce duties (i.e., to lower customs duty or import duties owed) is a federal felony. False classifications and undervaluing imports are common customs fraud schemes prosecuted under this statute. The government generally seeks to investigate and prosecute these cases under the theory that evading customs duty and import duties provides an unfair advantage over compliant importers.
18 U.S.C. § 542 – False Statements on Entry Documents
This statute criminalizes importing goods using false or fraudulent documents, invoices, or declarations to mislead customs authorities. Conduct commonly charged under this statute includes submitting fake paperwork, manipulating shipping documents or misrepresenting the value or origin of goods. Each violation carries up to 2 years of imprisonment. Submitting false information on entry documents can also constitute a false claim under the False Claims Act (FCA), which exposes individuals to civil penalties even if a criminal charge is not brought.
18 U.S.C. § 545 – Smuggling into the United States
This statute prohibits willful smuggling or handling of illegally imported goods. Violators face up to 20 years in prison, forfeiture of goods, and substantial fines. Convictions for smuggling can also result in the suspension or loss of import privileges. In the eyes of the government, smuggling undermines the integrity of international commerce and often triggers multi-agency investigations.
Related Offenses in Customs Fraud Cases
Other statutes often charged include:
18 U.S.C. § 287 – False Claims
18 U.S.C. § 1341/1343 – Mail and Wire Fraud
18 U.S.C. § 371 – Conspiracy to Commit Offense
50 U.S.C. § 1701 – IEEPA Violations (trade restrictions)
Related conduct, such as evading anti-dumping duties, is frequently prosecuted alongside these offenses.
These charges require proof of knowing and willful conduct. Honest mistakes are generally not prosecuted criminally.
Federal Agencies Investigating Import/Export Fraud
Key Investigating Agencies
CBP (Customs and Border Protection): Oversees import monitoring and tariff enforcement
HSI (Homeland Security Investigations): Investigates customs-related crimes and trade fraud
DOJ (Department of Justice): Prosecutes federal criminal customs violations
How Customs-Fraud Investigations Begin
Anomalies detected in the Automated Commercial Environment (ACE)
Referrals from CBP auditors or whistleblowers. Such referrals can also prompt an FCA investigation into potential customs fraud or tariff evasion. DOJ actively encourages whistleblowers to come forward with information about wrongdoing with the potential for financial reward.
e-Allegations portal reports
Raids, search warrants, and document subpoenas
Investigative Tools and Tactics
Import and shipping records review
Email and internal communications subpoenas
Surveillance and cooperating witnesses
Seizures and forensic audits
Physical inspections of cargo and facilities.
Common Defenses to Import and Customs Fraud Charges
Lack of Criminal Intent or Knowledge
A genuine belief that the goods were correctly classified and declared can often stave off a criminal indictment. Honest mistakes are civil matters.
Entrapment by Law Enforcement
If law enforcement coerced or induced illegal conduct, an entrapment defense may be available.
Mistake of Fact
Complex trade rules often result in genuine misunderstandings. Honest mislabeling due to confusing country-of-origin laws or incorrect tariff schedules can defeat criminal intent.
Insufficient or Improper Evidence
The government’s evidence can challenged if evidence was seized illegally or cannot meet the highest standard in the law: proof beyond a reasonable doubt that an individual committed the customs offense and did so with the required intent.
Civil Rather Than Criminal Liability
Even if there was a technical customs violation, a skilled lawyer can argue any remedy should be left to civil regulators.
Civil liability may include False Claims Act (FCA) liability for underpaid duties or misrepresentations, which can arise if customs violations involve false claims or statements related to import regulations. False Claims Act liability can result in treble damages, meaning violators may be required to pay three times the amount of underpaid duties.
Common Import/Export Fraud Schemes
The government frequently investigates fraud schemes involving a variety of tactics used by importers to avoid paying tariffs and duties, including:
Undervaluation of imported goods
Misclassification of items under the Harmonized Tariff Schedule (HTS)
False country-of-origin declarations (e.g., to avoid China tariffs), where importers may be falsely claiming a different origin or have falsely declared the true country to avoid paying tariffs or duties
Transshipment through third countries, often routing goods through an intermediate country to disguise their true origin or true country
Tariff engineering, where companies make minimal changes to products or their documentation to minimize tariff liability and avoid paying duties, sometimes disguising the true origin of goods
Importing restricted or counterfeit goods
Smuggling undeclared items to avoid customs inspection
Potential Penalties for Import and Customs Fraud
Criminal Penalties
Imprisonment: Up to 20 years per count for serious offenses like smuggling
Fines: Often based on duty value, reaching hundreds of thousands of dollars
Asset Forfeiture: Including the value of goods and tools used in the fraud
Collateral Consequences
Revocation of import/export licenses
Loss of government contracts
Immigration consequences (for non-citizens)
Reputational and business damage
Next Steps: More Enforcement
As federal enforcement priorities continue to evolve, businesses involved in international trade should prepare for a sharp increase in criminal investigations and prosecutions related to customs fraud. With the Department of Justice expanding its focus on trade-based offenses, it is clear that import-related cases—particularly those involving misclassification, undervaluation, and evasion of duties—will become increasingly common. The government is poised to treat customs violations not just as regulatory issues but as serious federal crimes.
