What Counts as Customs or Tariff Fraud?

• Undervaluation: declaring a lower price than was paid, using a second set of invoices, or leaving out assists, royalties and commissions that must be included in the dutiable value.
• Misclassification: declaring goods under a tariff code with a lower duty rate than the correct one.
• Country-of-origin fraud: labeling goods made in China or another high-tariff country as made somewhere else.
• Transshipment: routing goods through a third country and relabeling them to avoid Section 301 tariffs, antidumping duties or countervailing duties.
• Antidumping and countervailing duty evasion: misidentifying the producer or exporter to avoid duties imposed on specific companies.
• Splitting shipments to stay under the de minimis threshold.
• False claims for duty drawback, free trade agreement preferences or exemptions the goods do not qualify for.

How a False Claims Act Case Works

Customs fraud cases are reverse false claims: instead of taking money from the government, the importer knowingly keeps money it owes. The False Claims Act treats both the same way. A relator files a complaint under seal in federal court, the Department of Justice investigates with Customs and Border Protection and Homeland Security Investigations, and the relator receives 15 to 25 percent of the recovery if the government joins and 25 to 30 percent if it does not. The importer pays three times the duties it avoided plus a civil penalty for each false entry. The first relator to file controls the case.

Who Brings These Cases?

Import and logistics managers, compliance staff, employees of customs brokers and freight forwarders, accounting staff who see the two sets of invoices, overseas suppliers and their employees, and competitors who know the market price and can show the declared values are impossible. Competitor cases are common in this area because the competitor is the one being undercut.

What Our Firm Does

• Analyze the entries, the invoices, the tariff classifications and the origin claims with you.
• Prepare the complaint and the disclosure to the Department of Justice and Customs and Border Protection.
• File under seal and work with the government’s investigators.
• Litigate if the government declines.
• Protect you from retaliation and pursue your relator’s share.

Before You Report

• Do not confront the people involved or announce what you intend to do.
• Do not use a work computer, work phone or work email to contact a lawyer.
• Do not take documents you do not already have a right to see. Ask us first what you may keep.
• Write down what you know: who, what, when and how you know it.
• Do not wait. The first person to report is in the strongest position, and a later report with the same information may receive nothing.

Frequently Asked Questions

I am not an employee of the importer. Can I still report?

Yes. The False Claims Act does not require you to be an employee. Suppliers, brokers and competitors with specific, first-hand knowledge have brought successful customs fraud cases.

The importer used a customs broker. Who is liable?

The importer of record is liable for its own false declarations, and a broker or forwarder that knowingly helps is liable too.

What if the fraud is also a crime?

It often is. Customs fraud can be prosecuted criminally, and the government may pursue both. That does not reduce your relator’s share of the civil recovery.

How long do I have?

Six years from the violation, or three years from when the government knew or should have known, but no more than ten years. Tariff rates have changed quickly, so entries from the last several years are the ones that matter most.

What does it cost?

The first conversation is free and confidential. If we take your matter, the fee terms are put in writing before any work begins.

Talk to Us Before You Report

Email msiddons@siddonslaw.com from a personal account with a general description of what you know. Do not send documents. We will reply and tell you what to do next. Attorney Michael A. Siddons represents whistleblowers in Pennsylvania, New Jersey, New York, Maryland and Washington, D.C.