Antidumping / Countervailing Duty Fraud Defense

Defense Lawyers for Importers Accused of Evading Anti-Dumping or Countervailing Duties

Domestic importers that engage in fraudulent practices to avoid paying duties on imported goods can face serious consequences. In particular, attempting to evade anti-dumping duties or countervailing duties can lead to federal criminal prosecution in many cases. Oberheiden PC represents importers that are facing scrutiny from US Customs and Border Protection (CBP) and the US Department of Justice (DOJ).

John W. Sellers — **Attorney John Sellers**
International Trade Team Lead
Former DOJ Trial Attorney

**Glenn Karabeika**
International Trade Team
Former HSI Special Agent

Federal antidumping duties are intended to prevent foreign companies from “dumping” underpriced goods in the United States. Countervailing duties serve a similar purpose, offsetting foreign government subsidies that allow manufacturers in their countries to undercut the prices that US manufacturers need to charge.

US Customs and Border Protection (CBP) enforces antidumping and countervailing duty (AD/CVD) compliance, and the US Department of Justice (DOJ) pursues civil and criminal enforcement actions related to AD/CVD compliance when warranted. Allegations of antidumping or countervailing duty evasion can lead to serious consequences, and importers targeted in AD/CVD customs fraud cases need experienced legal representation.

Experienced Defense Counsel for AD/CVD Fraud Defense

Our attorneys have extensive experience representing importers and other clients in federal customs matters. If you are facing scrutiny from CBP or the DOJ, we can work with the appropriate federal authorities to target a favorable resolution on your behalf. Along with representing domestic importers, we represent foreign manufacturers, foreign exporters, and other businesses in international trade matters as well, and we handle customs fraud cases involving enforcement of all applicable federal laws and regulations.

Common Allegations in Cases Involving Antidumping and Countervailing Duties (AD/CVD)

While antidumping and countervailing duty cases can involve a wide range of allegations, some allegations are particularly common. Some examples of alleged fraudulent schemes that pose a high risk for federal enforcement include:

Misrepresenting Country of Origin

Misrepresenting unfairly priced imports’ country of origin on customs forms to evade tariffs imposed under federal law can lead to serious federal charges. When foreign goods from certain countries are subject to higher duties, claiming to have imported them from a different country is a clear violation of federal law. The same is true of rerouting goods that are subject to antidumping or countervailing duties through a third country (or engaging in transshipment of products to disguise their country of origin).

Misidentifying Imported Goods as Goods Not Subject to AD/CVD

Misidentifying imported goods in an effort to avoid high tariffs is a clear violation of federal law as well. Antidumping and countervailing duties are intended to protect domestic industries from being forced to compete with underpriced goods from foreign countries. Falsifying customs declarations or other customs documents in order to import underpriced goods is strictly prohibited, and incorrect classification of imported goods can lead to fraud allegations if the misclassification affects an importer’s duty liability.

Misrepresenting the Fair Market Value of Imported Goods

Misrepresenting the fair market value of imported goods for purposes of evading antidumping and countervailing duties also poses substantial legal risks. These duties are intended to level the playing field. When importers sell goods from foreign countries at below market value, this makes it impossible for domestic manufacturers to compete fairly. Federal customs laws seek to prevent this, and they include mechanisms for holding importers accountable when warranted.

AD/CVD Evasion Can Lead to Charges for Customs Fraud, False Claims Act Violations, and Other Offenses

Allegations of antidumping or countervailing duty evasion can lead to charges for a wide range of federal offenses. Some examples of potential charges in these cases include:

Customs Fraud

The federal customs fraud statute (19 USC Section 1592) prohibits importing foreign goods through the use of, “any document or electronically transmitted data or information, written or oral statement, or act which is material and false.” In cases involving intentional fraud, importers can face a civil penalty equal to the value of the imported goods.

False Claims Act (FCA) Violations

The False Claims Act (FCA) prohibits the submission of any “false or fraudulent claim” to the federal government. This includes the submission of “reverse false claims,” which involve underpaying amounts owed.

Many FCA enforcement actions involve whistleblower cases. If an individual files a whistleblower lawsuit (or qui tam) lawsuit under the False Claims Act, the whistleblower is entitled to a percentage of the government’s recovery (in most cases, whistleblowers can earn between 15% and 30% of the amount recovered). As a result, whistleblower cases can result in substantial financial rewards, and this provides a strong incentive for False Claims Act whistleblowers to come forward.

Federal Trade Commission Act (FTCA)

The Federal Trade Commission Act (FTCA) prohibits commercial parties from engaging in a wide range of unfair trade practices. This includes unfair trade practices involving the underpayment (or nonpayment) of antidumping and countervailing duties. While good-faith reliance on professional advice can help demonstrate a lack of intent, importers ultimately remain directly responsible for paying the duties they owe.

Conspiracy and Other Federal Crimes

Antidumping and countervailing duty evasion investigations can lead to charges for conspiracy, wire fraud, money laundering, and various other federal crimes as well. Notably, CBP can also impose interim measures during an investigation if it suspects AD/CVD fraud. These are serious crimes that carry serious consequences—including six-figure or seven-figure fines and years or decades of federal prison time.

Defending Against Allegations of Antidumping or Customs Duty Evasion

While allegations of antidumping or customs duty evasion can lead to a wide range of charges, there are also a wide range of potential defenses available. For example, establishing supply chain traceability can be critical for defending against these allegations, and a formal scope ruling from the US Department of Commerce can serve as a defense against AD/CVD evasion allegations in appropriate cases as well.

In all cases, documentation is critical. Evidence-driven defenses are essential for responding effectively to AD/CVD investigations; and, if importers (or other targeted parties) can affirmatively demonstrate compliance, this should help facilitate an efficient and favorable resolution. Even if it is not possible to avoid liability entirely, demonstrating a good-faith attempt to comply with the law can provide protection against facing criminal fraud charges under federal law. Our international trade lawyers can determine what defenses are available in your case, and then we can use these defenses to help protect you by all means available.

FAQs: Defending Against Allegations of Customs Duty Evasion

What are antidumping duties and countervailing duties?

Antidumping and countervailing duties are imposed under the Tariff Act of 1930 to prevent the US market from being flooded with underpriced foreign goods. Importers must pay these duties when they are owed, and their failure to do so can lead to serious fraud allegations. Antidumping duty fraud occurs when importers evade tariffs designed to prevent “dumping” by foreign manufacturers, while countervailing duty fraud occurs when importers evade tariffs designed to offset foreign subsidies.

What should I do if I am facing an Enforce and Protect Act (EAPA) investigation?

The Enforce and Protect Act (EAPA) is a federal statute that allows “interested parties” to report fraud involving antidumping duties and countervailing duties to CBP. EAPA investigations typically focus on allegations of entering merchandise into the United States through false statements in customs declarations and other customs documents. These are high-risk investigations; and, for targeted importers (and other targeted parties), engaging experienced defense counsel promptly is essential.

What are the penalties for submitting a “reverse false claim” under the False Claims Act (FCA)?

In civil enforcement cases under the False Claims Act (FCA), domestic importers and other parties can face liability for treble damages, fines, attorney’s fees and other financial penalties. In criminal enforcement cases under the FCA, defendants can face fines and prison time.

How do False Claims Act whistleblower cases work?

The False Claims Act’s qui tam provisions allow whistleblowers to report customs duty evasion and other forms of fraud to the federal government. Whistleblowers are protected from retaliation under the False Claims Act (FCA), their identities are protected during the government’s investigation, and they can receive monetary rewards when they help the government pursue successful cases.

The DOJ, CBP, and other enforcement agencies regularly pursue customs fraud cases based on whistleblower tips and data analytics. Once initiated, whistleblower cases proceed similar to other FCA cases, and they can result in either civil or criminal penalties.

When should I consider voluntarily disclosing underpayment (or nonpayment) of antidumping or countervailing duties?

While voluntary disclosures can mitigate the consequences of customs fraud, importers and other parties must be very careful when voluntarily disclosing violations to the federal government. To be considered “voluntary” a disclosure must be made before the government opens an investigation, and there are specific procedures that need to be followed to secure the protections that are available.

Schedule a Free Consultation with an International Trade Lawyer at Oberheiden PC

To speak with an international trade lawyer at Oberheiden PC in confidence, contact us today. We handle antidumping and countervailing duty fraud cases nationwide. Call 888-680-1745 or contact us confidentially online to arrange a free and confidential consultation.

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