DOJ Continues to Use False Claims Act to Address Customs Violations

On December 4, 2025, Ceratizit USA LLC agreed to pay $54.4 million to resolve False Claims Act (“FCA”) allegations tied to the evasion of customs duties on tungsten carbide products imported from China, concluding approximately three years of litigation. The 2022 qui tam filing by the relator/plaintiff alleged that Ceratizit evaded duties and violated country-of-origin marking rules applicable to tungsten carbide rods imported into the United States. This settlement stems from a coordinated effort between the Department of Justice (“DOJ”) and the Department of Homeland Security (“DHS”), through the United States Customs and Border Protection (“CBP”). The relator/plaintiff will receive approximately $9,750,000 of the settlement proceeds.  

The complaint further alleged that from August 2020 through March 2024, Ceratizit misrepresented the country of origin of Chinese-manufactured tungsten carbide products, including by trans-shipping goods through Taiwan and declaring Taiwan as the origin to avoid Section 301 tariffs applicable to goods of Chinese origin.  The settlement also resolves allegations that from May 2015 through March 2024, the company misclassified tungsten carbide products under the Harmonized Tariff Schedule (“HTS”) to reduce duties, and that, from May 2019 to March 2024, certain imported products were not properly marked with country of origin, leading to unpaid duties before distribution in the United States.

Why This Matters

As we noted in our December 8, 2025 Legal Update, the settlement underscores the second Trump Administration’s expanding use of the FCA to address trade fraud and duty evasion, signaling continued reliance on civil enforcement tools to address customs violations. Notably, the conduct at issue reaches back to 2015, demonstrating that historical import practices can remain within enforcement crosshairs and may resurface despite internal remediation or the passage of time. Whistleblowers also continue to play a pivotal role: the significant relator share here demonstrates the tangible incentive for employees, competitors, and watchdog organizations to report potential violations, particularly to the Trade Fraud Task Force (as we signaled in our September 8, 2025 Legal Update). Although this matter resolved civilly, the DOJ has emphasized its intent to explore the potential criminal charges when warranted by the facts—heightening the importance of proactive compliance and counsel engagement.

Practical Takeaways

• FCA as a trade-enforcement tool: The settlement demonstrates that FCA theories remain a central avenue for pursuing duty evasion, even where the underlying conduct concerns customs law. 
• Prepare for whistleblower-driven scrutiny: The significant relator share in this case reinforces the likelihood that internal or third-party reports will initiate investigations and ensure robust internal reporting channels and response protocols. 
• Anticipate coordinated civil-criminal risk: DOJ has emphasized the potential for criminal enforcement alongside the use of civil tools, making early engagement with counsel and remediation-planning essential. 
• Monitor Trade Fraud Task Force developments: The Task Force is becoming a powerful platform for Department of Justice efforts, accelerating enforcement in trade and customs fraud matters. 

Looking Ahead

The government has a broad arsenal—FCA theories, customs penalties, and potential criminal charges—to address tariff evasion and related trade fraud. Given the expansive time frame encompassed by this matter and the priority placed on the new Task Force’s mission, companies should expect continued, aggressive scrutiny of origin determinations, trans-shipment practices, and HTS classifications. Companies should also track DOJ statements and interagency initiatives described in our recent industry analyses and Legal Updates, including those highlighting escalations in criminal tariff evasion cases. For companies that suspect competitors are engaging in such misconduct, Mayer Brown can help evaluate and preserve evidence, assess options for engaging with DOJ and DHS, pursue appropriate administrative or judicial remedies, and develop strategies to mitigate harm and level the playing field while maintaining confidentiality and minimizing business disruption.