DOJ–DHS Trade Fraud Task Force Debuts with Sweeping China-Related Enforcement Actions

The Task Force—formed in August 2025—brings together prosecutors from DOJ’s Criminal and Civil Divisions with investigators from U.S. Customs and Border Protection (CBP) “to bring robust enforcement against importers and other parties who seek to defraud the United States.” (For additional background, see our prior alert discussing the Task Force’s formation and mandate.)

Although it appears the underlying investigations began before the Task Force’s creation, the December 18 announcements mark the Task Force’s first public role in ongoing cases. Taken together, the actions underscore DOJ’s increasing willingness to pursue civil and criminal remedies for alleged trade violations and signal an early enforcement focus on misclassification and misstatements of country of origin (COO), particularly with respect to imports from China.

Criminal and Civil Actions Announced on December 18

Criminal Resolution Involving MGI International and Guilty Plea by Senior Executive
In the first action, DOJ announced the resolution of a criminal investigation into MGI International LLC, an importer that knowingly evaded Section 301 tariffs on plastic resin from China by falsely declaring a different COO on customs entry documentation.

Under the resolution, DOJ issued a declination of prosecution as to MGI itself, citing mitigating factors that included the company’s timely and voluntary self-disclosure, full and proactive cooperation, and remediation. DOJ also agreed to credit MGI’s prior payment of approximately $6.8 million to resolve its related civil liability under the False Claims Act (FCA) toward any criminal penalty arising from the same conduct.

At the same time, DOJ announced a guilty plea by MGI’s chief operating officer, who was charged with conspiracy to smuggle goods into the United States in violation of 18 U.S.C. § 545. According to DOJ, the chief operating officer instructed subordinates to misrepresent the COO of plastic resin on CBP Form 7501 entry summaries in order to reduce duty liability.

FCA Settlement with Ceratizit USA LLC
The Task Force also announced a substantial FCA settlement with Ceratizit USA LLC resolving allegations that the company failed to pay Section 301 duties on tungsten carbide products originating in China.

According to DOJ, a private third party (“relator”) filed an FCA action alleging that Ceratizit misrepresented the COO of Chinese tungsten carbide by transshipping the merchandise through Taiwan. Declaring the products as Taiwanese in origin allegedly allowed Ceratizit to avoid the 25% Section 301 duties applicable to Chinese tungsten carbide.

Under the settlement, Ceratizit agreed to pay $54.4 million to the United States, nearly $10 million of which will be paid to the relator. While the settlement released civil claims, DOJ expressly reserved the right to pursue criminal charges against the company or individuals arising from the same conduct.

$53 Million Settlement with Wanxiang Group for Antidumping Duty Violations
In a third action, DOJ and CBP announced a $53 million settlement with Wanxiang Group resolving litigation (United States v. Wanxiang America Corp., No. 22-00205) alleging that the company violated 19 U.S.C. § 1592 by improperly entering Chinese automotive components without declaring them as Type 3 entries subject to an antidumping duty order on tapered roller bearings, thereby avoiding antidumping duties of 92.84%.

What These Actions Reveal About DOJ’s Trade Enforcement Strategy

The December 18 announcements provide an early but significant indication of how DOJ and CBP intend to deploy the Trade Fraud Task Force and how trade and customs violations may be charged criminally rather than being solely pursued as administrative or civil matters. The enforcement approaches below can be helpful to companies in assessing import risk and designing compliance policies for identification of accurate HTS codes and COOs, establishing contractual expectations with import services providers, and reporting errors in customs paperwork.

Customs Violations Framed as Criminal Smuggling
The MGI matter is particularly noteworthy for DOJ’s use of the federal smuggling statute, 18 U.S.C. § 545, to charge alleged misstatements of COO on customs entry documents. Historically, classification or COO errors have been addressed through CBP’s administrative penalty scheme under Section 1592 or, more recently, civil FCA actions initiated by private relators. Here, DOJ treated false statements on CBP Form 7501 as criminal smuggling, notwithstanding the absence of any physical concealment of goods. Section 545 is a felony statute and provides DOJ with an additional tool to pursue individual criminal liability where it can establish an intent to evade customs duties.

Parallel Civil and Criminal Exposure Is Increasingly Likely
Each of the announced matters reflects a coordinated enforcement approach. MGI resolved its civil FCA liability before the conclusion of the criminal investigation; Ceratizit’s settlement expressly preserves DOJ’s criminal charging authority; and Wanxiang’s case involved DOJ litigation alongside CBP enforcement under Section 1592.

These actions confirm that resolving one form of exposure—whether through CBP penalties or civil settlements—does not preclude additional enforcement action.

COO and Transshipment as Priority Risk Areas
All three actions involve alleged underpayment of duties on Chinese-origin merchandise, whether through misclassification, improper entry declarations or transshipment through third countries. DOJ’s focus on transshipment schemes reflects long-standing concerns surrounding Section 301 tariffs and antidumping and countervailing duty (AD/CVD) orders, which have only intensified this year with major increases in tariff levels from the Trump administration’s novel and more aggressive use of the International Economic Emergency Powers Act (IEEPA) and Section 232 of the Trade Expansion Act (Section 232), respectively.

The Ceratizit matter underscores the continued viability of FCA theories based on alleged transshipment, particularly where third-country routing or processing is used to support non-Chinese COO claims.

Continued Focus on Individual Accountability
DOJ’s prosecution of MGI’s chief operating officer reinforces DOJ’s (and the Task Force’s) broader policy of targeting individual executives who direct or authorize unlawful conduct. Trade compliance decisions often involve senior management, particularly where they relate to tariff exposure, sourcing strategies and COO determinations. DOJ will closely examine who made those decisions and whether subordinates were instructed to implement them.

Voluntary Disclosure: Benefits and Limits
The declination issued to MGI also highlights the potential benefits of voluntary self-disclosure, cooperation and remediation, including prompt repayment of duties owed. At the same time, the prosecution of an individual executive illustrates that voluntary disclosure does not necessarily shield corporate executives from criminal liability. Companies should also closely monitor DOJ’s anticipated issuance of a unified Corporate Enforcement Policy, which may further shape disclosure incentives in trade cases.

What Companies Should Do Now

In light of these developments, companies engaged in importing goods into the United States—particularly those sourcing from or routing products connected to China—should consider the following steps:

• Confirm that logistics and compliance functions are implementing accurate COO and classification determinations, especially in cases involving further processing or routing through third countries.
• Review tariff mitigation strategies for Section 301, AD/CVD, IEEPA and Section 232 exposure to ensure the strategies are legally supportable and well documented.
• Strengthen internal controls over customs entry data, including oversight of Form 7501 filings, product classification and COO declarations.
• Enhance executive and employee training on the civil and criminal risks associated with intentional customs misstatements.
• Revisit voluntary disclosure protocols and internal reporting procedures in anticipation of DOJ’s unified Corporate Enforcement Policy and be prepared to make affirmative disclosures to DOJ (and not just CBP) for customs violations. Note that the FCA provides incentives for private relators, and DOJ’s whistleblower rewards program identifies trade fraud as a priority area.
• Conduct robust investigations early when potential violations are identified, given the increased likelihood of parallel civil and criminal enforcement.