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Customs and Tariff Fraud Defense

Customs fraud used to end with a penalty notice and a negotiated payment. DOJ now charges transshipment, country-of-origin fraud, undervaluation and tariff evasion as federal crimes. Smuggling under 18 U.S.C. § 545 carries up to 20 years per count, and the civil, False Claims Act and criminal tracks often run at the same time.

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  • Aaron M. Cohen, more than 30 years of federal criminal defense. Federal fraud investigations and prosecutions nationwide.
Investigator's desk with a financial fraud case file, a forensic accountant's ledger, and subpoenaed records, representing a federal customs and trade fraud investigation

Customs Fraud Is Now a Criminal Priority

For years, a misdeclared country of origin or an undervalued invoice drew a penalty notice from U.S. Customs and Border Protection and a negotiated payment. That path still exists. It is no longer the only one.

On July 14, 2026, DOJ announced that its Trade Fraud Task Force, launched with the Department of Homeland Security in August 2025, had passed $1 billion in recoveries, penalties and charged losses in less than a year. DOJ also created a Global Trade and Commerce Enforcement Section inside the National Fraud Enforcement Division. The division's August 13, 2026 priorities memo lists trade fraud as its fourth priority and names four targets: transshipment, country-of-origin fraud, undervaluation and sanctions evasion.

The charging data moved with it. In TRAC data for August 2026, smuggling goods into the United States under 18 U.S.C. § 545 was up 100% from a year earlier. It ranked 9th among white-collar lead charges, up from 47th.

Who This Page Is For

Importers of record and their owners. Executives and officers who signed off on sourcing, pricing or routing. Customs brokers who prepared and transmitted entries. Freight forwarders and logistics companies who moved the goods. Compliance and trade staff who are now being asked for interviews.

How Customs Fraud Cases Start

  • CBP pre-penalty and penalty notices. Under 19 C.F.R. § 162.77, CBP states the alleged violation, the culpability level and the proposed penalty, and generally allows 30 days for a written and oral response.
  • EAPA allegations. A domestic competitor files an evasion allegation under the Enforce and Protect Act, 19 U.S.C. § 1517. CBP must open an investigation within 15 business days of a qualifying allegation, decide on interim measures within 90 calendar days, and reach a determination within 300 calendar days, extendable by 60.
  • Qui tam suits. A competitor, employee or former broker files under the False Claims Act. The complaint stays sealed while DOJ investigates.
  • HSI investigations. Homeland Security Investigations special agents interview employees, serve grand jury subpoenas, or execute search warrants at offices and warehouses.
  • Data and document review. Pricing that does not match the declared origin, a sudden change in the shipping country, or a supplier with no production capacity.

The Statutes and What the Government Must Prove

  • Smuggling, 18 U.S.C. § 545. Knowingly and willfully smuggling merchandise, passing false or fraudulent invoices or papers through customs, or knowingly importing merchandise contrary to law or dealing in it after import. Up to 20 years per count. Unexplained possession of the goods can be enough for a jury to convict, and the merchandise or its value is forfeited.
  • Entry by false statement, 18 U.S.C. § 542. Entering goods by a false invoice, declaration, statement or practice, or making a false statement in a declaration without reasonable cause to believe it is true. Up to 2 years per count.
  • Entry of goods falsely classified, 18 U.S.C. § 541. Knowingly entering goods under a false classification as to quality or value, or by paying less duty than is legally due. Up to 2 years per count.
  • Conspiracy to defraud the United States, 18 U.S.C. § 371. An agreement to impair the government's collection of duties, plus an overt act. Up to 5 years.
  • Wire fraud, 18 U.S.C. § 1343. Paired with § 371 when false invoices, payments or entry data move by wire. Up to 20 years per count. See federal wire fraud defense.
  • Sanctions evasion, 50 U.S.C. § 1705. Willful violations of IEEPA sanctions or export controls, including attempts and conspiracies. Up to 20 years and a $1,000,000 fine. Transshipment cases can carry both duty evasion and sanctions counts.
  • False statements and obstruction. Statements to agents under 18 U.S.C. § 1001 (up to 5 years) and altered records under 18 U.S.C. § 1519 (up to 20 years).

Transshipment, country-of-origin fraud and undervaluation are all proved the same way: the government compares what the entry said with what the documents, payments and emails show. Knowledge is almost always the contested element.

Penalties and How Sentencing Works

Customs offenses are sentenced under USSG § 2T3.1. The guideline treats the duty evaded as the loss and runs it through the § 2T4.1 tax table, so the offense level climbs with the duty amount. Sophisticated means increases are common in transshipment cases. When the case is charged as wire fraud, the government may argue for USSG § 2B1.1 and its loss table instead. Forfeiture and restitution of duties follow a conviction. Which guideline applies, and how the duty loss is measured, often matters more to the sentence than the number of counts.

The Civil and False Claims Act Track

19 U.S.C. § 1592. Section 1592 bars entering merchandise by material false statements, documents or omissions, through fraud, gross negligence or negligence. Fraud penalties can reach the domestic value of the merchandise. Gross negligence: the lesser of domestic value or four times the lost duties, or 40% of dutiable value if duties were not affected. Negligence: the lesser of domestic value or two times the lost duties, or 20% of dutiable value. CBP must also collect the lost duties under § 1592(d). The limitations period under 19 U.S.C. § 1621 is five years, running from discovery for fraud.

Prior disclosure, § 1592(c)(4). A disclosure made before, or without knowledge of, a formal investigation caps the penalty: interest on unpaid duties for negligence or gross negligence, and 100% of lost duties for fraud. It does not bind DOJ. Whether to disclose, and what the disclosure says about intent, is a criminal defense decision as much as a customs one.

False Claims Act. DOJ and whistleblowers use the reverse false claims provision, 31 U.S.C. § 3729(a)(1)(G), on the theory that the importer avoided an obligation to pay duties. Liability is three times the government's damages plus a per-violation penalty. A whistleblower receives 15 to 30% of the recovery under 31 U.S.C. § 3730, which is why competitors file.

How Customs Fraud Cases Are Defended

  • Knowledge and intent. Sections 542 and 545 require a culpable mental state. Most importers never see the foreign factory. Reliance on suppliers, brokers and written origin certifications is evidence of good faith that the government has to overcome.
  • Reasonable care. Importers must use reasonable care under 19 U.S.C. § 1484. A documented compliance process separates a negligence dispute from a fraud case.
  • The duty number. Classification, valuation and origin rulings decide how much duty was owed, and that number drives both the civil penalty and the guideline range.
  • Separate counsel for individuals. A corporate resolution does not protect the officers, brokers or employees. Their interests can diverge from the company's early.
  • Timing. The strongest work happens before indictment, while prosecutors are still deciding whom to charge and on what theory.

Working Alongside Customs Counsel

Classification, valuation and origin questions are technical trade law. AMC Defense Law works alongside your customs counsel on those issues while we handle the criminal exposure: HSI contact, grand jury subpoenas, target letters, proffers, charging decisions and any prosecution. The civil response, the prior disclosure decision and the criminal defense have to say the same thing.

What to Do Now

  1. Do not talk to agents without counsel. Take their cards and any subpoena or warrant. Tell staff they may decline interviews.
  2. Preserve everything. Entry files, invoices, packing lists, mill and origin certificates, supplier emails, broker communications and pricing models. Do not alter or complete records after an inquiry starts.
  3. Do not answer a pre-penalty notice alone. The civil response can become evidence in a criminal case.
  4. Call federal defense counsel. Then bring in customs counsel, or let us coordinate with yours.

Who Handles Your Case

Aaron M. Cohen has more than 30 years of federal criminal defense experience in fraud investigations and prosecutions. Our team includes a federal investigations consultant who is a former FBI Supervisory Special Agent and a Certified Public Accountant licensed in Ohio and Florida, with a career investigating complex financial crime, and a sentencing strategist who works on loss analysis and mitigation from the start. We represent clients in Florida and federal districts nationwide. More on related charges: federal fraud and white-collar defense, money laundering, and target letter and pre-indictment defense.

Frequently Asked Questions

Yes. Entering goods by false statement under 18 U.S.C. § 542 carries up to two years per count. Smuggling under 18 U.S.C. § 545, which includes passing false invoices or documents through customs and knowingly importing merchandise contrary to law, carries up to 20 years per count. Prosecutors often add conspiracy to defraud the United States under 18 U.S.C. § 371 and wire fraud under 18 U.S.C. § 1343. Counts can be charged entry by entry, so a company with hundreds of entries faces more than one count. Most sentences are driven by the duty evaded, not the statutory maximum.

A pre-penalty notice under 19 C.F.R. § 162.77 is civil. CBP states the alleged violation, whether it charges fraud, gross negligence or negligence, the estimated loss of duties, and the proposed penalty, and you generally have 30 days to respond in writing and orally. A criminal investigation is run by HSI special agents and federal prosecutors, often through grand jury subpoenas. The two can run at the same time. What you say in a civil response can become evidence in the criminal case, so the response should be written with both tracks in mind.

The statute has three tiers. For fraud, the penalty can reach the domestic value of the merchandise. For gross negligence, it is the lesser of the domestic value or four times the lost duties, taxes and fees, or 40 percent of the dutiable value if duties were not affected. For negligence, it is the lesser of the domestic value or two times the lost duties, or 20 percent of the dutiable value. CBP must also collect the lost duties under § 1592(d), whether or not it assesses a penalty. The limitations period is five years, and for fraud it runs from discovery.

A prior disclosure under 19 U.S.C. § 1592(c)(4) is a voluntary report of a violation made before, or without knowledge of, a formal investigation. It caps the civil penalty. For negligence or gross negligence, the penalty becomes interest on the unpaid duties. For fraud, it becomes 100 percent of the lost duties. The tender of duties is due at disclosure or within 30 days of CBP's calculation. A disclosure is also an admission, and it does not bind DOJ. Before filing, counsel should assess whether a criminal investigation may already be open and what the disclosure will say about intent.

Yes, through two routes. Under the Enforce and Protect Act, 19 U.S.C. § 1517, a domestic producer or other interested party can file an evasion allegation with CBP. A competitor or former employee can also file a qui tam suit under the False Claims Act, sealed for at least 60 days while DOJ investigates. The whistleblower can receive 15 to 30 percent of the recovery. That reward is why many customs investigations now start with a competitor or an insider rather than a CBP audit.

No, not without counsel. Homeland Security Investigations special agents are criminal investigators. When they ask about country of origin, transshipment or valuation, they usually already have your entry summaries, invoices, shipping records and supplier emails. A statement that conflicts with those records can become a separate false statement charge under 18 U.S.C. § 1001. Take the agents' cards, decline the interview politely, do not destroy or alter anything, and call a federal defense lawyer the same day.

They can be. Section 1592 reaches anyone who aids or abets a violation, not only the importer of record. Section 545 reaches anyone who knowingly receives, conceals, buys, sells or helps transport merchandise imported contrary to law. Brokers and forwarders are most exposed when they prepared or transmitted documents they had reason to doubt, or when their emails show they knew about routing or relabeling. They often need counsel separate from the importer's, because their interests can diverge quickly.

Yes. We represent importers, executives, customs brokers and freight forwarders in federal investigations and prosecutions nationwide. A customs offense involving imported goods can often be charged in any district the goods moved from, through or into, so a case may be venued far from the port of entry. We appear pro hac vice where required and work with local and customs counsel in the district where the case is brought, so the defense starts wherever the investigation is.

Justice Watch Analysis

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Customs Fraud Is Now a Criminal Case, Not a Penalty Notice: What Florida Importers Face

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This page is attorney advertising and general information, not legal advice. Contacting AMC Defense Law does not create an attorney-client relationship. Prior results do not guarantee a similar outcome. Aaron M. Cohen, Esq., is responsible for the content of this page. AMC Defense Law, 1200 N. Federal Highway, Suite 300, Boca Raton, Florida 33432.