Free Trade Agreement Fraud Defense

Our Defense Attorneys Represent Importers, Government Contractors, and Other Parties Accused of Free Trade Agreement (FTA) Fraud

Our attorneys defend clients facing trade fraud investigations nationwide. Allegations of Free Trade Agreement (FTA) fraud can expose importers, government contractors, and other parties to serious consequences—including False Claims Act liability and other civil or criminal penalties.

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

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

Free Trade Agreement (FTA) fraud involves underpaying federal customs duties in violation of the Trade Agreements Act (TAA). The Trade Agreements Act requires that imported goods originate from designated trade partners that comply with certain international agreements, including the United States’ FTAs with other countries.

Several Federal Authorities Enforce TAA and FTA Compliance

Federal authorities are prioritizing TAA and FTA fraud enforcement, with the US Department of Justice’s Trade Fraud Task Force taking the lead. For companies that are unable to demonstrate TAA compliance, facing allegations of TAA fraud or FTA fraud can have serious consequences. Our TAA compliance lawyers defend companies facing investigations, civil enforcement actions, and criminal prosecution in cases involving:

US Department of Justice (DOJ)
US Customs and Border Protection (CBP)
US Department of Homeland Security (DHS)
US Homeland Security Investigations (HSI)
Other federal agencies

We provide defense representation for civil and criminal customs enforcement matters involving other federal trade laws as well. We also handle cases involving alleged violations of federal securities laws, allegations of money laundering, and other allegations that often arise in customs fraud cases.

Free Trade Agreement (FTA) Fraud Involves Routing Foreign Goods Through Designated Countries to Evade Customs Duties

The US Department of Justice (DOJ) in particular has prioritized Free Trade Agreement (FTA) fraud enforcement in recent years. In A Resource Guide to Trade Fraud Enforcement (2026), the DOJ’s Trade Fraud Task Force describes a typical case as follows:

“This scheme involves an importer claiming preferential duty rates under an FTA . . . for goods that do not actually qualify under the applicable Rules of Origin. Fraud actors may use a swapping technique where they ship raw materials from a non-FTA country to an FTA partner, but instead of processing them, they substitute finished, non-qualifying goods for the return shipment to the United States. They then present a fraudulent Certificate of Origin to CBP to claim duty [p]references, including duty-free treatment.”

From engaging in fraudulent practices to failing to maintain proper documentation, various issues can lead to scrutiny related to allegations of Free Trade Agreement fraud. When facing scrutiny, it is critical to have a clear and comprehensive understanding of the circumstances at hand. While companies, corporate executives, compliance officers, importers, customs brokers, and other targets can face serious consequences in FTA fraud cases, there are several potential defenses available in both civil proceedings and criminal enforcement actions. The key is to identify the specific defenses that apply based on the specific allegations of non-compliance at issue.

We Provide Experienced Defense Representation for FTA Fraud Enforcement Actions Nationwide

At Oberheiden PC, we defend clients in FTA fraud enforcement actions nationwide. From importers to government contractors, we represent clients throughout the supply chain, and we handle cases involving all aspects of federal trade compliance.

When companies are accused of failing to ensure TAA compliance, they can face a wide range of related statutory allegations. In many cases, corporate executives and other insiders can face allegations as well.

We work with the government on behalf of our clients to efficiently and favorably resolve allegations of:

False Country of Origin Designations

False country of origin designations are at the center of most cases involving allegations of FTA fraud. When a company misrepresents a product’s country of origin in order to bypass FTA restrictions or to evade anti-dumping duties, countervailing duties, or duties imposed under the Tariff Act and Harmonized Tariff Schedule (HTS), this can lead to a variety of charges under federal law.

Importing Goods Manufactured with Forced Labor

While FTAs are intended to advance US trade policy in general, they are also intended to serve a variety of specific purposes. One of these specific purposes is ensuring that US importers do not patronize foreign manufacturers that use forced labor. TAA violations involving imported goods manufactured with forced labor can lead to a variety of charges as well, particularly when they also involve duty evasion and other customs-related offenses.

False Claims Act Violations

The False Claims Act (FCA) prohibits importers, government contractors, and other parties from submitting “false or fraudulent claims” to the federal government. This includes both: (i) submitting invalid claims for payment under government contracts; and, (ii) submitting “reverse false claims” that involve underpayment of import duties.

In the international trade context, potential violations of the FCA can take many different forms. This is especially true in cases involving imports that implicate the TAA regulations and FTAs. Our international trade compliance team has extensive experience in this area; and, if you need defense counsel for a False Claims Act case, we can get to work immediately.

Failure to Maintain Effective Compliance Programs

Maintaining effective internal controls is essential for avoiding international trade violations during (and after) the import process. When companies fail to conduct adequate due diligence (including conducting risk assessments) or proactively manage compliance on an ongoing basis, this can lead to serious allegations that could—and should—have been avoided. Companies that have not maintained effective compliance programs are at increased risk of facing allegations of gross negligence or reckless disregard—and these allegations can increase the penalties for noncompliance significantly.

Fraud Against the Government (Including the General Services Administration (GSA))

Government contractors must prioritize compliance with the Trade Agreements Act (TAA) to avoid serious fraud allegations. Among other things, this includes strictly complying with federal customs rules and regulations related to Free Trade Agreements when necessary. Contractors that are not TAA-compliant may be prohibited from billing the government, and making false statements about TAA compliance in order to bill the government is a clear form of fraud that can lead to criminal prosecution under the FCA.

FAQs: Defending Against FTA Fraud Allegations From the Federal Government

What can (and should) companies do to reduce their risk of facing FTA fraud allegations?

Effectively managing federal customs compliance is a multi-step (and ongoing) process. From conducting robust supply chain audits in order to prove compliance with FTA “rules of origin” to promptly taking remedial action upon discovering compliance errors, importers and other businesses need to take a comprehensive approach to managing their risk.

Candor is a key aspect of trade compliance—and it is one of all companies’ core legal obligations. Not only must companies make accurate representations and disclosures in customs declarations and government contracts, but they must also promptly address compliance failures when necessary. Our lawyers assist with all aspects of federal trade compliance, and we assist companies with defending against allegations of FTA fraud when necessary.

What are the penalties for failing to meet the compliance requirements for importers under Free Trade Agreements between the US and foreign countries?

The penalties for failing to meet the compliance requirements for importers under the United States’ Free Trade Agreements depend on the specific charges federal authorities choose to pursue. For example, under the federal customs fraud statute, companies accused of intentionally underpaying customs duties can face civil penalties of up to the full domestic value of the merchandise at issue. Under the False Claims Act, companies can face treble damages in civil cases, and they can face substantial fines in criminal enforcement actions (individuals can also face prison time). Other penalties may apply as well.

What should I do if my company has been accused of Free Trade Agreement (FTA) fraud by the federal government?

When facing allegations of any form of Free Trade Agreement (FTA) fraud, it is critical to engage experienced defense counsel immediately. These are high-stakes allegations that can lead to substantial monetary penalties (among other consequences). US Customs and Border Protection (CBP) and the US Department of Justice (DOJ) are prioritizing FTA fraud cases involving country-of-origin misrepresentations, and these cases can involve exposure to civil or criminal penalties depending on the circumstances involved.

What if I wasn’t aware of the need for Free Trade Agreement (FTA) compliance?

While ignorance of the law can generally serve as a defense to criminal culpability in these cases, it does not provide protection from civil liability. As a result, in these cases, an informed and strategic approach is key. Our lawyers can assess the risks you are facing based on the circumstances at hand, and then we can work with the appropriate federal authorities on your behalf to target a resolution that avoids unnecessary consequences.

Contact the Free Trade Agreement Fraud Defense Lawyers at Oberheiden PC

If you would like to speak with a Free Trade Agreement fraud defense lawyer at Oberheiden PC, we invite you to get in touch. Once you do, we will arrange for you to speak with one of our senior lawyers in confidence as soon as possible. To schedule an appointment at Oberheiden PC, call 888-680-1745 or tell us how we can help online now.

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