On December 18, 2025, the Department of Justice announced a $54.4 million settlement with Ceratizit USA LLC, a distributor of tungsten carbide products, to resolve allegations that the company evaded customs duties on goods imported from China. The settlement is the largest customs fraud resolution in False Claims Act history. The whistleblower who brought the case to the government’s attention received a share of the recovery under the law.
The Ceratizit case did not arise in isolation. It came on the heels of the DOJ’s August 2025 launch of a cross-agency Trade Fraud Task Force, a coordinated effort involving the Civil and Criminal Divisions of the DOJ and the Department of Homeland Security. The Task Force was created specifically to pursue tariff evasion and other forms of customs fraud. This might lead to an increase in this type of whistleblower case.
How the False Claims Act Applies to Customs Fraud
The False Claims Act allows the government to recover money when a person or company knowingly submits a false claim for payment or, in customs cases, knowingly avoids an obligation to pay money owed to the government. Failing to pay customs duties that are legally owed is what the law refers to as a “reverse false claim;” rather than submitting a fraudulent invoice to receive a payment, the violator conceals a debt it owes.
The distinction does not diminish the legal exposure. Violators face liability for up to three times the amount of duties they evaded, plus civil penalties. Under the Act’s qui tam provisions, a private citizen can file suit on behalf of the United States and share a percentage of what the government recovers.
Fraud Patterns That Whistleblowers Are Reporting
The Ceratizit case reflects a broader range of customs fraud schemes that the DOJ has pursued in recent years. Anyone working in import/export operations, trade compliance, freight forwarding, or supply chain management may recognize one or more of the following.
Country of origin fraud
Importers route goods through intermediate countries (Taiwan, Vietnam, Malaysia, and others) to avoid tariffs that apply to Chinese-origin products. The goods are sometimes relabeled or minimally processed before being shipped onward to the United States. The U.S. Customs and Border Patrol’s (CBP) ability to detect this transshipment fraud depends heavily on insider knowledge of where goods are actually manufactured.
Tariff misclassification
Goods are assigned Harmonized Tariff Schedule codes that carry lower duty rates than the correct classification would require. A company may deliberately use an incorrect code, or it may instruct freight brokers or customs brokers to do so. Misclassification can reduce duties owed to zero in some cases.
False import documentation
Customs entry forms contain certifications about the nature, value, and origin of goods. When importers falsify these forms, they are submitting false claims under the FCA, whether by undervaluing merchandise, misdescribing what is being imported, or claiming exemptions that do not apply.
Evasion of antidumping and countervailing duties
These additional duties are assessed on specific categories of goods that are being sold in the United States at unfairly low prices or that have received foreign government subsidies. Importers who misrepresent product specifications or country of origin to avoid these duties have faced False Claims Act enforcement, as demonstrated by the Grosfillex patio furniture case and the Evolutions Flooring case (both settled in 2025).
Who Is in a Position to Report Customs Fraud?
Customs fraud is difficult for federal agencies to detect without the assistance of people who have direct knowledge of what is happening inside a company’s supply chain. The individuals most likely to have that knowledge include:
- Employees in trade compliance, import/export operations, or customs brokerage who are aware that documentation has been falsified or that duty payments are being deliberately reduced.
- Freight forwarders and logistics personnel who handle the movement of goods and see the discrepancy between what products actually are and how they are declared to CBP.
- Purchasing and procurement staff who know where goods are actually manufactured and recognize when origin declarations do not match reality.
- Competitors who have lost business to importers they know are pricing goods below market by evading the duties their competitors pay in full.
The whistleblower in the Ceratizit case was a competitor in the metalworking products industry. His familiarity with how tungsten carbide products are sourced and manufactured gave him the kind of knowledge that made his complaint credible and, ultimately, successful.
The Government Is Escalating Its Enforcement Posture
The Ceratizit settlement was not a one-off. In the first eight months of 2025 alone, the DOJ announced four separate customs fraud settlements under the False Claims Act. Beyond civil enforcement, the DOJ Criminal Division has identified trade and customs fraud, including tariff evasion, as among its highest priorities, and has established a dedicated unit within the Criminal Division’s Fraud Section to pursue criminal prosecutions. Enforcement officials have made clear that both civil and criminal tools are on the table.
The Trump Administration’s tariff policies, including Section 301 tariffs on Chinese goods and antidumping and countervailing duties across a range of industries, have increased the financial incentive for bad actors to commit customs fraud. The higher the applicable duty rate, the more money an importer can save by evading it. That dynamic is not lost on enforcement officials or on the relators’ bar, both of which are paying closer attention to customs compliance than at any point in recent memory.
Speak with a Whistleblower Attorney About What You Know
If you have knowledge of customs fraud, you may be entitled to file a qui tam complaint and receive a portion of whatever the government recovers. Federal law also protects you from retaliation by your employer for coming forward.
The whistleblower attorneys at Keller Grover have experience representing clients in False Claims Act cases across a range of industries. Contact our legal team to discuss what you know and what your rights may be.