Civil and Criminal Investigations in Customs Fraud or Evasion
Companies facing a civil or criminal investigation for customs fraud or evasion of customs duties, excise taxes, or antidumping / countervialing duties (AD/CVD), are advised to immediately retain legal representation.
Our customs attorneys understand the nuances of the customs and trade laws. We understand and can respond to such allegations. There may be legal measures that should be undertaken immediately to either dispute, confirm, challenge, or protect legal rights.
Our customs lawyers are known nationally and internationally for their work in customs and international trade law.
The firm's offices are located in San Francisco, California, Seattle, Washington, and Los Angeles, California.
Our practice areas include classification, valuation, admissibility, customs detentions, seizures and penalty proceedings, and customs audits. We bring litigation, and handle numerous other types of issues arising in international trade. See our services listings.
General Information about government investigations
The Office of the U.S. Attorney, organized within the Department of Justice (DoJ), is responsible for prosecuting civil and criminal violations of federal law. If there is reasonable cause to suspect criminal wrongdoing, the Assistant U.S. Attorney (AUSA) and federal investigators acting under the authority of the DOJ have a number of investigative tools at his or her disposal, such as:
Civil Investigative Demands (CID)
Civil versus Criminal Proceedings
Civil actions and criminal actions implicate different burdens of proof and differing legal processes.
In the civil context, a defendant may be sued by the United States and find itself arguing in slow moving federal proceedings for many years.
However, in the context of a criminal prosecution, a defendant may be suddenly informed that a grand jury was convened to indict the defendant (or a charging document filed in lieu of an indictment), and that the defendant needs to secure counsel to prepare immediately for trial. Defendants who are foreign nationals may face immigration (and particularly visa issues) implicated by the possibility of criminal charges being brought.
If a civil investigation is carried out by an agency, a subpoena may be issued requiring the defendant to furnish testimony and/or documents. Alternatively, a search warrant may be secured, and it serves to accomplish the same purpose of fact-finding. Either method results in the government securing documents and obtaining testimony as evidence.
Another relatively recent development relates to the government's use of Civil Investigative Demands (CIDs). These are provided for under 31 USC 3733. CIDs were originally created as a tool available only to the Attorney General; however, in 2009, the Fraud Enforcement and Recovery Act of 2009 (FERA) allowed the Attorney General to delegate that authority to the various US attorneys, located around the country. The CID is similar to a subpoena in that it may seek both documents and testimony, however, unlike a subpoena, the CID is much easier for the government to issue. Additionally, while the CID may appear similar in nature to the traditional tools of civil discovery (such as document requests, interrogatories and depositions) note that these investigative tools are not mutual (as is the case in discovery), and may be utilized against a broad range of non-party individuals and companies. An importer may be required to respond to the CID, and concurrently, so may the importer's Customshouse broker.
In terms of invoking liability for trade compliance violations, Customs and Border Protection (CBP) most commonly asserts civil liability under the authority of the Customs negligence and fraud statute (19 U.S.C. 1592).
In contrast, an Assistant U.S. Attorney (AUSA), may decide to invoke any number of other federal statutes (both civil and criminal), including 18 U.S.C. 1341 & 1342 (mail & wire fraud); 18 U.S.C. 1001 (false statements); 18 U.S.C. 545 (smuggling), and 31 U.S.C. 3729 et seq. (False Claims Act)
Our customs attorneys represent companies under investigation or charged with customs fraud or AD/CVD fraud (evasion)
Contact a firm attorney directly at (415) 498-0070.
Curated News Re: Criminal Fraud & Investigations:
See also, our FCA News Page
December 3, 2018: OIG: Report on CBP’s electronic searches at the border.
December 13, 2018: DOJ: Dietary supplement ingredient importers arrested in connection with large-scale smuggling and money laundering scheme.
November 5, 2018: NYT: Justice Department Charges Chinese Company With Espionage
November 2, 2018: DOJ: Conviction for counterfeit sales (Nike shoes, UGG boots and NFL jerseys) and identity fraud results in 30 month prison sentence.
July, 2018: CIT suggests that a U.S. buyer might be liable for another company's import transactions. United States v. Gateway Import Management et al., Slip Op. 18-83 (July 3, 2018). See also, United States v. Maverick Marketing Inc., Slip Op. 18-84 (July 3, 2018).
June 8, 2018: DOJ: NY customs broker pleads guilty to mail fraud in evasion of excise taxes on cigars.
April 16, 2018: Montana U.S. District Court sentences Canadian online pharmacy to pay $35 million, 6 months house arrest, and 5 years probation. The case involved undervaluation of the drugs to avoid filing commercial entries, drop-shippers, mis-handled drugs, and counterfeit anti-cancer drugs that lacked an active ingredient.
March 6, 2018: Video: Inside Homeland Security Investigations (HSI) which investigates and enforces 400+ federal laws.
January 25, 2018: DOJ: Sinovel Wind Group Conviction.
January 4, 2018: CBP: Border Search Directive: CBP DIRECTIVE NO. 3340-049A
January 9, 2018: Article: CBP Warrant-less boarder searches at all-time high
December 22, 2017: California Apparel company pleads guilty to money laundering scheme.
December, 2017: United States v Kim. In United States v Kim, the US DOJ achieved liability than is customary by invoking Part 2S1.3 of the Sentencing Guidelines to assert that the offense (an offshore tax cases) could be sentenced under the money laundering/monetary transaction reporting offences.
October 2017: DOJ: FCA Settlement: Company's domestic purchases allegedly "aided the fraudulent scheme by ignoring warning signs that . . . irregular business practices were highly suggestive of fraud." Consent order here.
August, 2017: USTR Report to Congress on Trade Enforcement Priorities.
June, 2017: Streetsboro tire company indicted for fraudulently avoiding nearly $10 million.
June, 2017: Congress: Organic foods: Concerns expressed over fraudulent imports.
March, 2017: Chemical Company and Its Owner Sentenced for Rebate Scheme, False Statements to U.S. Customs.
January, 2017: Customs opens fraud center in Puerto Rico: San Juan Trade Enforcement Coordination Center.
October 21, 2016: CBP: TFTEA Regulations proposed re: ADCVD Evasion investigations.
September 10, 2016: Customs continues pursuit of evasion in Honey industry.
May 15, 2016: Customs Trade Enforcement Task Force.
June, 2016: HSI pursues evasion in Chinese honey.
October, 2015: DOJ Yates Memo: DOJ Guidance on Accountability of Individuals for Corporate Fraud.
September 18, 2016: Nevada: Online colored-contact lens business pleads guilty to counterfeitting and misbranding.
BIS and DOJ announce prosecution and plea bargain in WI case involving the export of luxury vehicles. Among the charges: wire fraud and false AES statements.
February, 2015: Aluminum Extrusions fraud results in prison sentences.