False Customs Declaration Defense

Defense Counsel for Importers, Customs Brokers, Freight Forwarders, and Others Accused of Submitting False Declarations

US Customs and Border Protection (CBP) relies on importers’ customs declarations to manage its oversight of imported goods and collect import duties in accordance with federal law. As a result, CBP takes false customs declarations very seriously. Our lawyers defend importers and other parties in customs enforcement matters involving allegations of submitting false declarations nationwide.

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

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

Companies that knowingly import merchandise into the United States in violation of federal law can face serious consequences. The risks are especially high when companies engage in intentional customs fraud schemes to evade federal oversight or customs duties. Recently, US Customs and Border Protection (CBP) and the US Department of Justice (DOJ) have placed increased emphasis on pursuing cases involving suspected false customs declarations.

Importers, customs brokers, freight forwarders, and other parties accused of submitting false customs declarations to CBP need experienced legal representation. Along with civil penalties, these accusations can create exposure to criminal prosecution in many cases. Our international trade lawyers handle false declaration cases nationwide. Whether you are facing civil fines or criminal liability, we can use our experience to help protect you and your business by all means available.

We Defend Companies Accused of Using False Declarations to Evade Federal Oversight

In many cases, CBP and the DOJ target allegations of using false declarations to evade federal oversight. For example, as the DOJ’s Trade Fraud Task Force explains:

“To bypass USDA and CBP agriculture inspections, importers may falsely declare high-risk food products (such as, for example, pork or poultry from disease-affected regions) as less-likely-to-be-inspected items such as footwear or plastic toys. This fraud is particularly dangerous as it risks introducing foreign animal diseases or invasive pests into the U.S. ecosystem. Fraud actors may exploit the reality of high-volume container traffic or low-value shipments, hoping that [a] generic HTS code will prevent [federal scrutiny].”

From transshipping goods through multiple countries in order to hide their true country of origin to smuggling goods under incomplete customs declarations, these types of accusations can take a wide range of forms as well. We handle cases involving all forms of alleged violations of federal customs laws and customs regulations. Regardless of the specific allegations at hand, our lawyers can communicate with the federal government on your behalf. While we seek to proactively demonstrate our clients’ customs compliance whenever possible, we are also prepared to defend against legitimate allegations of customs fraud when necessary.

We Also Defense Companies Accused of Using False Declarations to Evade Customs Duties

Our lawyers are also available to handle cases involving accusations of using false declarations to evade customs duties. When filing customs declarations with CBP, importers and other companies must accurately describe the goods being imported and pay duties owed under the Harmonized Tariff Schedule (HTS), as well as any additional duties owed (i.e., anti-dumping or countervailing duties). Intentionally making false statements on a customs declaration in order to pay reduced duties under a lower tariff classification is a clear form of fraud.

Misrepresenting goods’ domestic market value, misrepresenting their country of origin, and other common misrepresentations on customs declarations can lead to serious fraud allegations as well. Our lawyers handle all relevant types of cases, relying on their extensive experience to convince the federal government not to impose penalties whenever possible.

Possible Enforcement Actions Involving False Customs Declarations

Allegations of submitting false customs declarations to CBP can lead to a variety of charges under US federal law. Depending on the specific allegations involved, some examples of potential charges include:

Customs Fraud

Customs fraud is a federal offense that carries varying penalties depending on whether federal prosecutors pursue charges based on negligence, gross negligence, or intent. Cases involving false customs declarations will often involve charges based on intent, which can carry penalties equal to the domestic value of the merchandise involved.

Duty Evasion

Duty evasion can be prosecuted as a criminal offense under federal law. Submitting false customs declarations to avoid high tariffs on imported products is a common method of duty evasion, and it can lead to high-stakes federal charges. While de minimis exceptions and other defenses apply, facing allegations of attempting to avoid duties through fraudulent means generally entails significant liability exposure.

False Claims Act Violations

The False Claims Act prohibits the submission of “false or fraudulent claims” to the federal government. This includes submitting “reverse false claims” in an effort to underpay customs duties (among other forms of fraud). In civil enforcement actions under the False Claims Act, importers and other parties can face liability for treble damages (triple damages) and other financial penalties. In criminal enforcement actions, defendants can face fines and prison time.

Smuggling

Using false customs declarations to transport raw materials or other goods from a third country into the United States without going through the formal entry process can lead to smuggling charges under 18 USC Section 545. Even when goods are imported from overseas suppliers for export to foreign customers in international commerce, customs compliance is mandatory. Smuggling is a serious federal offense; and, from importers to logistics providers, federal authorities can (and do) target parties throughout the supply chain in these cases.

Other Federal Crimes

Along with the offenses listed above, allegations of using false declarations to conceal imported goods’ true origin or to evade US customs duties can lead to various other federal criminal charges as well. While voluntary disclosure can mitigate importers’ and other parties’ risk in some cases, once a federal investigation is underway, targeted parties must be prepared to use their compliance documentation, foreign manufacturers’ production records, and other relevant forms of documentation to defend themselves by all means available.

Enforcement Trends in Customs Fraud Cases

Recently, CBP and the DOJ have been prioritizing customs fraud cases involving efforts to evade federal import controls and customs duties, including countervailing duties imposed to combat unfair foreign government subsidies. They have recently placed increased emphasis on targeting shipments routed through an intermediary country to conceal their country of origin as well (i.e., shipments of Chinese goods).

In these (and other cases), the outcome depends on targeted parties’ ability to defend themselves effectively. For example, while being able to use on-hand compliance documentation to demonstrate reasonable care can substantially mitigate targeted parties’ risk in many cases, being unable to affirmatively demonstrate compliance can significantly increase the likelihood of facing serious criminal charges.

FAQs: Customs Fraud Defense for Importers and Other Targets of Federal Inquiries

Can double invoicing expose importers and other parties to criminal charges in the US?

Yes, double invoicing (creating two invoices with different values for imported goods) is one of several fraudulent practices that can expose importers and other parties to criminal charges in the United States. Customs authorities can also seize and forfeit merchandise imported under false declarations used in connection with double invoicing schemes.

While false statements made in customs declarations must be material to constitute a violation of federal law, fabricated invoices will satisfy this “materiality” standard in most cases. Additionally, while false customs declaration cases often involve unpaid (or underpaid) duties, the government does not have to show actual losses to establish criminal culpability.

What are some potential defenses to allegations of country-of-origin fraud?

There are several potential defenses to allegations of country-of-origin fraud, which is a common allegation in false declaration cases. These include lack of intent, good-faith reliance on professional advice, and clerical errors (provided that they are not indicative of a pattern of negligence or willful ignorance), among others. If importers and other companies can demonstrate that they have implemented robust internal compliance controls, including conducting internal audits, this can help rebut allegations of intentional customs fraud and limit their potential liability exposure as well.

What should I do if my company is being targeted by a customs fraud whistleblower?

Customs fraud whistleblower cases are becoming increasingly common. Since whistleblowers can receive between 15% and 30% of funds recovered under the False Claims Act (FCA), former employees, competitors, and other individuals have a strong financial incentive to come forward.

If your company is being targeted by a customs fraud whistleblower, you should engage experienced defense counsel promptly. From undervaluation of goods to misrepresentation of country of origin (the US defines origin based on the “last substantial transformation” of imported goods) and other common methods of tariff evasion, numerous whistleblower allegations can lead to serious federal charges.

Do I need a lawyer if I have been accused of submitting a false customs declaration to CBP?

Due to the significant risks involved, if you have been accused of submitting a false customs declaration to CBP, you should engage an experienced defense lawyer promptly. At Oberheiden PC, we have extensive experience in the area of international trade compliance, and we can represent you on an emergency basis if necessary.

Speak with a False Customs Declaration Defense Lawyer at Oberheiden PC

To speak with a senior false customs declaration defense lawyer at Oberheiden PC, contact us today. Call 888-680-1745 or contact us confidentially online to arrange a free, no-obligation consultation.

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