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Federal Customs Violations: Import/Export Crime Defense
The phone call from a customs broker is not the beginning. By the time a business owner receives notice that Customs and Border Protection has flagged an entry, the investigation has been underway for weeks, sometimes months, conducted through data analysis and cross-referencing that the importer never perceives until the consequences arrive. Federal customs violations occupy a peculiar position in criminal law: the conduct that triggers them is often indistinguishable from ordinary commerce until a federal agent decides it is not.
Under the primary criminal statutes, the penalties are severe. Section 545 of Title 18 carries a maximum of twenty years for smuggling. Section 542 carries two years for false statements at entry. The civil provision, 19 U.S.C. § 1592, imposes penalties up to the domestic value of the merchandise, a figure that in tariff evasion cases frequently exceeds what the goods themselves were purchased for.
What has changed is the willingness to treat routine commerce as criminal conduct.
The Statutory Framework
Section 545 of Title 18 requires the government to prove that a defendant acted knowingly and willfully, with intent to defraud the United States. The statute covers two categories: those who smuggle or clandestinely introduce merchandise that should have been invoiced, and those who import merchandise contrary to law while knowing that the importation violates it. The second category is broader than it appears. It encompasses not only the person who arranged the shipment but anyone who receives, conceals, purchases, or facilitates the movement of goods they know were imported in violation of federal law.
Section 1592 of the Tariff Act operates on a different plane. It is a civil penalty provision, and it does not require proof of intent to defraud. The three tiers of culpability are negligence, gross negligence, and fraud. For negligence violations involving a loss of duty, the penalty can reach twice the lost revenue. For fraud, it can reach the full domestic value of the goods. The distinctions matter because the government can pursue civil and criminal remedies in parallel, and resolving one form of exposure does not preclude the other.
A December 2025 enforcement action involving a New York plastics importer confirmed the parallel structure in practice. The company resolved its civil False Claims Act liability for several million dollars, and the Department of Justice then separately pursued a criminal resolution through its Corporate Enforcement Policy. The company’s former chief operating officer pled guilty to conspiracy to smuggle goods under § 545.
The question of which track a case follows is often determined before the importer knows there is a case at all.
The Task Force and What It Signals
In August of 2025, the Department of Justice and the Department of Homeland Security announced the formation of a cross-agency Trade Fraud Task Force. The announcement was itself a signal: the Task Force draws prosecutors from both the Civil and Criminal Divisions, pairs them with investigators from CBP and Homeland Security Investigations, and directs them to pursue enforcement through the Tariff Act, the False Claims Act, and, where the facts support it, criminal prosecutions, penalties, and seizures under Title 18.
The DOJ’s May 2025 white collar enforcement memorandum had already designated trade and customs fraud as a high priority. The Task Force is the operational structure built to execute that priority. Its first public enforcement actions arrived in December, and they revealed something that practitioners in this area had been observing: the government’s willingness to charge false statements about country of origin on customs forms as criminal smuggling under § 545. In the MGI International matter (in which the company had falsely declared Chinese plastic resin as originating from Taiwan and routed shipments through Canada to obscure the source), the DOJ treated CBP Form 7501 misstatements as felony smuggling, a theory that, if it holds, converts what was historically an administrative penalty matter into a criminal prosecution carrying up to twenty years.
Whether the Task Force represents a permanent structural shift in how trade fraud is prosecuted or a political response to the current tariff environment is a question that cannot be answered from the present moment.
The whistleblower dimension compounds the risk. The Corporate Whistleblower Awards Pilot Program now includes trade fraud as an eligible category, meaning an individual who provides information leading to a forfeiture exceeding one million dollars may receive a financial award. The False Claims Act’s qui tam provisions have long permitted private individuals to file sealed complaints on behalf of the government, and three of the four civil settlements the DOJ highlighted at the Task Force’s announcement originated from whistleblower actions. In a tariff evasion scheme of any scale, there are employees, brokers, freight forwarders, and foreign suppliers who know or suspect the true origin of the goods. The enforcement incentives are now structured so that one of them will eventually have reason to talk.
The enforcement pace has increased, and the resources behind it suggest it will continue. In a concurrent December 2025 action, a tungsten carbide importer agreed to pay more than fifty million dollars to resolve False Claims Act allegations tied to misclassification and country of origin misstatements. The relator stood to receive a substantial award.
Intent and the Architecture of a Defense
Every federal customs prosecution turns, in the end, on what the defendant knew. Or, if we are being precise, on what the defendant understood at the time the entry was filed.
The Ninth Circuit’s model jury instructions for § 545 require the government to prove three elements: that the defendant knowingly smuggled or attempted to smuggle merchandise without proper declaration, that the defendant knew the merchandise was of a type requiring declaration, and that the defendant acted willfully with intent to defraud the United States. The intent element is not a formality. It is the structural center of the statute, and the defense of most customs cases is built around it.
But the government does not need to prove the defendant understood the specific tariff classification or the precise duty rate. It needs to prove the defendant knew, in substance, that what was being declared was false or that the importation violated the law. The gap between those two thresholds is where most cases are litigated. A business owner who signs entry documents prepared by a customs broker may not have examined the Harmonized Tariff Schedule classification or the declared country of origin. Whether that inattention constitutes willful blindness or reflects the ordinary reliance of a nonexpert on a licensed professional is a question of fact that a jury must resolve.
In our experience, the government’s theory of intent is built less on what the defendant said and more on what the defendant should have known given the documents available to them. Internal emails, communications with foreign suppliers, pricing discrepancies between the declared value and the purchase price, prior correspondence about tariff classifications: these form the evidentiary record the government assembles before bringing charges. The records matter more than the testimony.
The customs broker relationship requires specific attention. A standard defense posture is to argue that the importer relied in good faith on the broker’s classifications and country of origin determinations. This argument has force when supported by documentation showing the broker received accurate information from the importer and made independent classification decisions. It weakens when the government demonstrates that the broker was following the importer’s instructions, or instructions the importer should have questioned. We examine that relationship in the first week of any engagement, because the government, in building its case against the importer, often discovers that the broker was following directions rather than exercising independent judgment, and that discovery reshapes the entire defense. That is where the defense begins, and it is where most of the work concentrates.
Voluntary Self-Disclosure
Before an investigation begins, the importer has an option that disappears once the government moves first. Under 19 C.F.R. § 162.74, a prior disclosure filed before CBP commences a formal investigation qualifies as a mitigating factor in the agency’s penalty determination. For negligence violations where the disclosure is timely and complete, and the importer tenders the owed duties plus interest, CBP generally imposes no penalty at all.
The calculus is not simple. A disclosure is an admission, and it can be shared across agencies, including with the DOJ. It also creates a legal record of knowledge: any continuation of the disclosed conduct after the filing may be characterized as willful, which elevates both the civil penalty tier and the criminal exposure. I am less confident than some practitioners that voluntary disclosure eliminates criminal exposure entirely, though the data on outcomes is thin enough that strong claims in either direction are premature.
The procedural requirements for an effective disclosure are specific:
- Conduct an internal audit before filing. The scope of the disclosure must match the scope of the problem.
- Tender owed duties at the time of filing. CBP requires this for mitigation credit.
- Submit the disclosure before any indication that CBP is already aware. A Form 28 Request for Information or a Form 29 Notice of Action may signal that the window has closed.
We counsel against disclosures that cherry-pick entries or minimize the scope of the problem, because a partial disclosure that CBP later finds incomplete can convert what would have been a negligence matter into something the government treats as willful.
The disclosure must precede the investigation, and the margin between the two is not always visible.
The Quiet Part
Most of the people who contact this firm about a customs matter do not call when the problem begins. They call when it has become unavoidable. The letter has arrived, or the goods have been seized, or a broker has mentioned that CBP sent a request for information weeks ago. The stress is a specific variety: not the acute emergency of an arrest but the low, sustained uncertainty of not knowing whether a business practice that seemed ordinary will be recharacterized as criminal, or whether a personal guarantee signed at the inception of the company now carries consequences that extend beyond the balance sheet.
The enforcement environment described above is not likely to recede. The resources are allocated, the whistleblower incentives are in place, and the Task Force has produced its first results. For any business that imports goods into the United States, the compliance question is no longer whether the existing program is adequate but whether it can withstand the scrutiny the government is now positioned to apply.
A first conversation assumes nothing and costs nothing; it is the point at which diagnosis becomes possible.