The Justice Department knows how to use the False Claims Act — it is the primary tool against fraudsters in the healthcare industry, and going back even further, it was used against the defense industry in the 1980s and 1990s.  DOJ has turned the tool towards another angle and this portends a significant trend. 

DOJ is opening up a new front in the trade enforcement area — use of the False Claims Act with the leverage of whistleblowers.  The FCA requires only meeting the civil burden and whistleblowers will probably include competitors who suspect that individual companies are circumventing payment of required tariff and duty payments.  Evading these fees is a way to gain a significant competitive advantage and corporate whistleblowers are ready to bring these new cases againt violators.

While there were FCA cases in this area prior to 2025, DOJ occasionally brought such cases.  In 2025, DOJ focused on this used of the FCA and created a task force for prosecuting trade fraud, a sure sign that this is a priority.  Adding to this recent development, the caselaw surrounding potential jurisdictional arguments requiring claimants to bring FCA cases in the Court of International Trade as opposed to federal district courts was resolved by the Ninth Circuit.  These two events combined to demonstrate the significant new direction that DOJ has charted.

To reinforce this trend, in December 2025, DOJ announced a significant FCA settlement with Ceratizit USA LLC, pursuant to which Ceratizit agreed to pay $54 .4 million to resolve FCA violations for circumventing customs duties on tungsten carbide products imported from China.  Ceratizit evaded duties by violating country-of-origin marking rules to tungsten carbide rods imported into the United States.  In addition, Ceratizit evaded duties by trans-shipping good through Taiwan and claiming Taiwan as the country-of-origin.

In another major development at the end of 2025, DOJ resolved a trade fraud case against MGI International, LLC and its two subsidiaries.  MGI misrepresented the country of origin of plastic resin to avoid paying tariffs on China-origin products.

In a sign of things to come in 2026, DOJ secured a guilty plea from MGI’s former COO for instructing his subordinates to misrepresent the manufacturer and country of origin on import paperwork.

In keeping with its promise to decline cases where companies volunarily disclose misconduct and cooperate, DOJ declined to charge MGI criminally, noting its timely and voluntary self-disclosure, cooperation and remediation including repayment of the evaded tariffs.

Aside from the Certatizit and MGI cases, DOJ signaled throughout the year its commitment to prosecute tariff evasion cases.  For the year, DOJ prosecuted six FCA cases involving customs fraud. Four of the six involved claims related to anti-dumping and countervailing duty evasion.  Two cases in 2025 were initiated by competitors of the offending company, an important trend and potential risk area.

The $54.4 million Ceratizit case is significantly larger than prior cases and indicates an aggressive approach to fine negotiations going forward.  Two other cases involved total fines over $10 million, Allied Stone at $12.4 million and Harman International at $11.8 million.

Under the FCA, DOJ pursues a “reverse” false claims theory of prosecution, where false statements are made in a manner to evade paying government fees, as opposed to the traditional use of the FCA for government overpayment of reimbursement for healthcare services.

DOJ also expanded the incentives for whistleblowers to report false claims act cases when it amended its whistleblower program to include trade, tariff and customs fraud.

With the new era of aggressive FCA enforcement, importers have to invigorate their controls to avoid evading payment of tariffs and duties as well as filing false or inaccurate paperwork.  There is now too much at stake with aggressive enforcement on the export side (sanctions and export controls) and now on the import side with false claims act risks for underpayment of duties.

In the background, however, business interests are seeking to challenge the False Claims Act on constitutional grounds claiming the qui tam program violates the Appointments Clause.  While only one district court has ruled this way, there may be more coming and could be a groundswell of interest in bringing a challenge through the appellate courts to the Supreme Court.  This is something that could have a dramatic impact on the use of the False Claims Act, which is primarily enforced through qui tam led prosecutions.