In the last weeks of 2025, the U.S. Department of Justice (DOJ)-led cross-agency Trade Fraud Task Force announced a record $54 million civil settlement in a federal False Claims Act (FCA) case based on alleged avoidance of tariffs on products imported from China and the conclusion of a significant criminal investigation into alleged customs violations. These two resolutions, released on December 18, 2025, indicate that the widely anticipated increase in customs fraud enforcement has arrived. Importers that have not yet prepared for stepped-up enforcement should do so now.

Record-Setting Civil Settlement 

First, the DOJ announced a $54.4 million dollar FCA settlement in United States ex rel. Stover v. Ceratizit USA, et al., No. 2:22-cv-12291 (E.D. Mich.), the largest ever in a case related to customs evasion. Defendant Ceratizit USA, LLC (Ceratizit), a South Carolina company, is a major importer of tungsten carbide rods. The qui tam relator, a whistleblower who claimed to be an industry participant, first alleged that Ceratizit had fraudulently avoided tariffs on China-origin rods by transshipping them through Taiwan and falsely claiming Taiwan as the country of origin. Second, the relator alleged that Ceratizit failed to mark the country of origin on the rods or to pay the resulting "marking duties" on the unmarked rods. Lastly, the relator alleged that Ceratizit misclassified the imported rods under the Harmonized Tariff Schedule of the United States (HTSUS) and thereby misinformed the government about what products were being imported and underpaid duties owed on the rods. The relator received $9,750,000 of the settlement as a reward for bringing the case. 

Notably, the DOJ alleged that Ceratizit misclassified imports dating back to 2015, failed to properly mark imports dating back to 2019, and misrepresented countries of origin dating back to 2020. The broad timespan of the DOJ's investigation is a reminder to importers that the agency's trade fraud enforcement activity can focus on any past conduct within the statute of limitations, as well as ongoing import activity.

Criminal Prosecution of Corporate Officer

Also on December 18, the DOJ announced the resolution of a criminal trade fraud investigation into MGI International, LLC, and two of its subsidiaries (collectively, MGI). MGI was accused of intentionally misrepresenting the country of origin of plastic resin in order to avoid paying section 301 tariffs on China-origin products. MGI's former Chief Operating Officer (COO) David Guimond was accused of instructing his subordinates to misrepresent the manufacturer and country of origin on import paperwork. Guimond agreed to plead guilty to a criminal information charging conspiracy to smuggle goods into the U.S. and is facing a maximum penalty of five years in prison. Historically, criminal charges based on trade fraud have been relatively rare, adding to the significance of the criminal prosecution of Guimond.

The DOJ declined to pursue criminal charges against MGI, noting MGI's timely and voluntary self-disclosure, cooperation, and efforts at remediation including repayment of the evaded tariffs, and credited $6.8 million previously paid to resolve MGI's civil liability under the FCA. The DOJ also acknowledged MGI's "termination and disciplinary actions against the employees involved in the scheme, an internal review of the misconduct, an internal review of its compliance program and internal controls, a thorough and systematic root-cause analysis and enhancements to its broader compliance program." 

Emerging Trends for Customs Cases Under the FCA

The DOJ's investigations of Ceratizit and MGI were both handled by the cross-agency Trade Fraud Task Force, which coordinates investigative efforts between the DOJ Criminal Division's Fraud Section, the Civil Division, the Department of Homeland Security (DHS), and U.S. Attorney's Offices nationwide, to pursue tariff violations and smuggling. Over the last year, the DOJ has increasingly signaled that it intends to take aggressive actions to investigate and penalize customs violations, including fraudulent avoidance of tariffs. 

The two resolutions announced by the DOJ on December 18, 2025, are only the latest significant customs-related case announcements to take place over the last year. The DOJ announced six FCA settlements resulting from allegations of customs fraud in 2025 and those settlements suggest several new developments in DOJ customs enforcement:

• Four of the six resolutions announced in 2025 involved claims related to anti-dumping and countervailing duty (AD/CVD) evasion, including cases involving misrepresentations of products' countries of origin. This marks a significant change of focus from previous years. By our count, the DOJ announced only two tariff-related FCA settlements from 2021 through 2024. 
• In addition to AD/CVD violations, FCA settlements over the last year also indicate that the DOJ is aggressively pursuing claims involving misrepresentations of country of origin and misclassifications of imported goods (as in Ceratizit), as well as undervaluation claims. 
• While the most common whistleblower plaintiff/relator in customs-related FCA cases is still current and former employees, two cases in 2025 involved whistleblowers who were competitors. When developing reporting mechanisms and conducting internal reviews, importers must be mindful that their supply chains are being scrutinized internally, as well as potentially by others in the industry seeking a competitive advantage. 
• At $54.4 million, the settlement in Ceratizit is markedly larger than historical norms. Records show that the median resolution for customs-related FCA cases since 2021 is approximately $1.3 million. In addition to Ceratizit, there were three eight-figure settlements in customs-related FCA cases in 2025, including Allied Stone at $12.4 million and Harman International Industries at $11.8 million. The Ceratizit resolution marks a potentially significant trend of increasing settlement amounts that is likely to continue. 
• The criminal charges against Guimond show that the DOJ is willing to aggressively pursue company executives who engage in customs fraud. In January 2025, the DOJ also announced a sentence of 30 months in prison for the owner of several New York jewelry companies who engaged in a scheme to evade customs duties on jewelry shipments.
• In announcing its decision not to prosecute MGI, the DOJ highlighted its application of the factors in its Criminal Enforcement Policy (CEP), including "MGI's timely and voluntary self-disclosure of the misconduct." In contrast, the DOJ did not show the same restraint in recent high-profile resolutions against Harman International Industries, Inc. (for $11.8 million) and Grosfillex, Inc. ($4.9 million), where no voluntary disclosure or cooperation was identified.

The DOJ's actions on December 18 demonstrate that it is following through on its publicly stated intentions to aggressively pursue trade and customs enforcement. It is reasonable to expect that more significant trade fraud prosecutions are in the pipeline. Importers are advised to review their internal compliance structures, including reporting hotlines, to ensure that concerns from potential whistleblowers can be identified and investigated internally before the government becomes involved. Companies that identify points of non-compliance – even if years in the past – should also seek legal guidance when considering the best approach to remedy those issues, including the possibility of proactively reporting known issues to the Trade Fraud Task Force.

For more information, please contact:

William P. Barry, wbarry@milchev.com, 202-626-5974

Joshua Drew, jdrew@milchev.com, 202-626-5811

Richard A. Mojica, rmojica@milchev.com, 202-626-1571

Bradley E. Markano, bmarkano@milchev.com, 202-626-6061

Brittany Huamani, bhuamani@milchev.com, 202-626-5911

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