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Customs and Tariff Fraud is Becoming a Major Whistleblower Lane Under the False Claims Act

June 15, 2026
Last reviewed and updated on: June 15, 2026 at 12:48 pm
Customs and Tariff Fraud is Becoming a Major Whistleblower Lane Under the False Claims Act

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The DOJ’s FY2025 False Claims Act materials make customs and tariff fraud a current enforcement priority. According to customs fraud whistleblower attorney Jason T. Brown, “The DOJ is taking these matters very seriously both criminally and civilly and the customs fraud whistleblowers we present to the government draw a large audience and a high level of interest.” A strong signal of government interest is the $54.4 million Ceratizit USA LLC False Claims Act (FCA) resolution, which the DOJ described as the largest customs-fraud resolution ever under the FCA. The settlement involved alleged underpayment of duties on tungsten carbide products imported from China, including alleged country-of-origin misrepresentations, HTS misclassification, and failure to pay marking duties.

Why Customs Fraud is Attracting Whistleblowers

For insiders, customs fraud is often easier to recognize because the alleged misconduct often leaves a paper trail: entry summaries, invoices, origin certifications, HTS classifications, supplier records, shipping documents, and internal emails about duty exposure.

DOJ’s FY2025 FCA results show how powerful the whistleblower model has become: more than $6.8 billion in FCA settlements and judgments, 1,297 new qui tam lawsuits, and more than $5.3 billion recovered in qui tam matters. Those numbers matter because customs cases can now sit inside a proven whistleblower enforcement model: a private relator identifies alleged fraud, files under seal, and the government may investigate and intervene.

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The new trade-enforcement posture is also reflected institutionally. The DOJ and DHS launched a cross-agency Trade Fraud Task Force in August 2025 to pursue tariff and duty evasion through the Tariff Act, the False Claims Act, and, where appropriate, parallel criminal tools. The DOJ’s announcement specifically encourages whistleblowers to use the FCA’s qui tam provisions to report credible trade-fraud allegations.

How Tariff Underpayment Becomes a False Claims Act Case

Customs fraud does not always involve a company requesting money from the government. Many cases are “reverse false claims” matters, where the allegation is that the importer knowingly avoided or decreased money owed to the government.

Related: Brown, LLC secured two of the year’s largest individual recoveries — a $950M settlement against Raytheon and $350M against Walgreens. Learn about our False Claims Act practice →

That is the theory the DOJ used in Ceratizit. The settlement agreement states that the United States contended Ceratizit “knowingly conceal[ed]” or “knowingly and improperly avoid[ed] or decreas[ed]” an obligation to pay money to the government, in violation of 31 U.S.C. § 3729(a)(1)(G). The statute reaches false records or concealment tied to an obligation to pay or transmit money to the United States.

Since the Fraud Enforcement and Recovery Act of 2009, the FCA has defined “obligation” in 31 U.S.C. § 3729(b)(3) to include established duties arising from statute, regulation, or the retention of any overpayment, a definition that squarely covers customs duties owed on imported merchandise. The exposure that follows is severe. A violation carries treble damages measured by the duties evaded, plus civil penalties adjusted annually for inflation that can attach to each false entry. Because importers often file thousands of entry lines over the relevant period, per-entry penalties alone can rival or exceed the underlying duty loss, which is part of why customs FCA settlements like Ceratizit reach into the tens of millions.

In other words, an FCA customs case may arise when the alleged falsehood affects duties owed to U.S. Customs and Border Protection. The DOJ customs fraud matters often focus on country of origin, customs value, HTS classification, duty rates, antidumping and countervailing duties, Section 301 tariffs, and whether required duties were paid before imported goods entered U.S. commerce.

What the Ceratizit Resolution Shows

Ceratizit is important because the facts alleged by the DOJ are the kinds of issues insiders may actually observe. According to the settlement agreement, Ceratizit was a Charlotte-based distributor of tungsten carbide products. The DOJ alleged three categories of conduct.

First, from August 2020 through March 2024, Ceratizit allegedly misrepresented the country of origin for certain tungsten carbide products. The DOJ alleged the products were manufactured in China, transshipped to Taiwan, and then entered as Taiwanese-origin goods, avoiding Section 301 duties applicable to Chinese-origin products. Two concepts in that allegation deserve unpacking. Section 301 of the Trade Act of 1974 authorizes the additional tariffs imposed on Chinese-origin goods beginning in 2018, in many product categories an extra 25% on top of ordinary duty rates, which creates a powerful financial incentive to disguise where goods were actually made.

And transshipment does not launder origin: under customs law, routing Chinese-made goods through a third country changes the country of origin only if the goods are substantially transformed there into a new and different article of commerce. Merely repackaging, relabeling, or warehousing products in Taiwan leaves them Chinese-origin goods, and declaring otherwise to CBP is a misrepresentation, not a workaround.

Second, from May 2015 through March 2024, the DOJ alleged Ceratizit misclassified products under HTS code 8311.90.00, with a duty rate of “Free,” rather than HTS code 8209.00.00, with a 4.6% ad valorem duty.

Third, from May 2019 through March 2024, the DOJ alleged certain products were not marked with country of origin and that Ceratizit failed to pay marking duties required by 19 U.S.C. § 1304 before distributing the products in the United States. The marking duty is no technicality. Section 1304 requires imported articles to be marked so the ultimate U.S. purchaser knows where they were made, and it imposes an additional duty of 10% ad valorem on articles that enter commerce unmarked, on top of all other duties owed. For an importer already allegedly concealing Chinese origin, unmarked goods serve a second purpose: there is nothing on the product itself to contradict the entry paperwork. Ceratizit denied the allegations, and the settlement agreement states it was not an admission of liability.

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Over 100 million in judgments and settlements trials in state and federal courts. We fight for maximum damage and results.

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The whistleblower signal is equally direct. The case was filed by relator Mark Alan Stover in the Eastern District of Michigan, and the settlement agreement provides for a relator share of $9.75 million plus a proportionate share of interest. That $9.75 million award equals roughly 18% of the $54.4 million recovery, squarely within the 15% to 25% of proceeds that 31 U.S.C. § 3730(d)(1) guarantees a whistleblower when the government intervenes in a qui tam case. Where the government declines to intervene and the whistleblower’s counsel litigates the case to recovery, the statutory share rises to between 25% and 30%, and in either posture the defendant is separately liable for the relator’s reasonable attorneys’ fees and costs.

Documentation Failures That Can Create FCA Risk

The DOJ’s recent customs cases show several recurring documentation patterns. In Barco Uniforms, the DOJ alleged undervaluation of imported garments through a double-invoicing scheme and false entry summaries submitted to CBP. The press release also noted that a commercial invoice reflecting value is required to support CBP declarations.

In Allied Stone, the DOJ alleged Chinese quartz surface products were misrepresented as other merchandise, such as marble or crystallized glass, to avoid antidumping and countervailing duties. Antidumping duties offset foreign goods sold in the United States below fair value, while countervailing duties offset foreign government subsidies. In product categories like Chinese quartz surfaces, the combined AD/CVD rates can run to several multiples of the goods’ value, far beyond ordinary tariff rates, which is exactly why product-identity and origin misrepresentations cluster in those categories: even a small misdescription can erase an enormous duty bill. In Evolutions Flooring, the DOJ alleged false information was submitted about manufacturers and country of origin for multilayered wood flooring.

Whistleblower tip:If you’ve witnessed Medicare or Medicaid billing fraud at your employer, you may qualify as a qui tam relator with a potential share of the government’s recovery. See our Medicare & Medicaid fraud practice →

In Global Plastics and Marco Polo, the DOJ resolved allegations involving incorrect country-of-origin and value declarations for plastic resin products from China. That matter also shows the DOJ’s view that self-disclosure, cooperation, and remediation may affect settlement credit, though that is different from whether an insider has already identified credible fraud concerns.

What Insiders Can Watch For

Potential whistleblowers may want to pay attention to facts like these:

  • Product descriptions that do not match the actual imported goods
  • HTS classifications selected mainly because they reduce duties
  • Supplier documents showing a different country of origin than the entry paperwork
  • Transshipment through a third country without meaningful manufacturing there
  • Different invoices for customs and internal accounting purposes
  • Internal warnings from brokers, auditors, logistics teams, or trade counsel that are ignored
  • Pressure to keep using a questionable classification, origin claim, or valuation method after concerns are raised
  • Missing or altered country-of-origin markings on products headed into U.S. distribution

Does This Sound Familiar?

Have you seen imported goods described one way to CBP and another way internally? Have you seen emails acknowledging that a product was made in China but entered as originating somewhere else? Have you been asked to approve an HTS code that did not match the product’s actual use, composition, or commercial description? Have broker questions, audit findings, or internal trade-compliance warnings gone nowhere?

Those are the types of facts that matter in an FCA customs case. The key question is not whether every classification dispute is fraud. It is whether documents, communications, or conduct suggest the company knowingly avoided duties owed to the United States.

Will 2026 Bring More Trade-Focused Whistleblower Suits?

The available government record points in that direction. The DOJ has elevated trade fraud through a dedicated task force, highlighted customs avoidance in its FY2025 FCA materials, cited multiple customs settlements and lawsuits, and publicly encouraged whistleblowers to report credible trade-fraud allegations through FCA qui tam channels.

For importers, trade lawyers, government-contracting counsel, and supply-chain professionals, the takeaway is clear: tariff underpayment is now firmly part of the FCA conversation. For insiders, the question is whether the documents tell a story of mistakes, reasonable disagreement, or knowing avoidance.

Brown sees the incentives converging: “Tariff rates are higher and more politically charged than they have been in decades, which raises both the temptation to evade and the dollar value of every scheme. The whistleblowers who come forward with entry summaries, invoices, and emails showing what the company actually knew are the ones driving these record customs recoveries, and the False Claims Act compensates them accordingly.”

People with inside knowledge of customs, tariff, origin, valuation, or classification misconduct should consider speaking confidentially with a customs fraud whistleblower lawyer. A legal consultation can help assess whether the facts may support a False Claims Act report and how to protect confidentiality and rights before taking any action.

This post is based directly on the government sources listed below, with primary emphasis on the DOJ press releases, DOJ’s FY2025 FCA materials, the Ceratizit settlement agreement, and the federal False Claims Act text. Factual statements about allegations, settlement amounts, relator shares, dates, statutes, and procedural posture were checked against those sources. Allegations discussed above remain allegations unless the cited source states otherwise; Ceratizit denied the allegations, and the settlement agreement was not an admission of liability.

Reviewed by

Patryk Pienkowski

Patryk Pienkowski

Legal Assistant. Patryk holds a B.A. in Political Science with minors in Philosophy and Legal Studies in Business from Seton Hall and is passionate about assisting others.

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