Information About False Claim Act (FCA) Investigation and Violations

The False Claims Act, in particular, has become a favored statutory tool of the DOJ in Customs enforcement matters since the statute both (a) grants the government broad investigatory powers (see Government Investigations) and (b) provides for significant monetary liability. 

Indeed, Companies often become aware of FCA investigations when a Assistant U.S. Attorney with the Department of Justice (DOJ) begins to exercise that broad investigative power by the issuance of a Civil Investigative Demand (CID).

As to the later, the FCA provides for the imposition of treble damages, plus civil fines per occurrence (see below for more detail), plus interest accruing, and legal costs (not including the potential for other criminal and civil repercussions).

Moreover, the statute of limitations in false claims act violations is significantly longer than in ordinary sec. 1592 negligence cases, and is subject to waiver during periods of 'wartime.'   

The FCA is also unique in that it permits private individuals to initiate a lawsuit (as a whistle-blowers acting on behalf of the government) and accordingly, it provides monetary incentives to that party, termed a "qui tam relator," in the amount of 15 to 30 percent of the funds recovered by the government. 

In the Customs context, a FCA qui tam violation usually falls under a special provision in the statute known as a "reverse-false claim." This is a consequence of Customs violations typically involving material false statements, or omissions, which serve to avoid the payment of monies that would otherwise have been owed to the government. 

Customs False Claim Act cases have been lucrative for the government and typically arise in duty related disputes such as:

• related party valuation,

• undeclared assists or allegations of double invoicing,

• Avoidance of antidumping and countervailing duties,

• mis-classifications under the US tariff

AD/CVD and other violations of the customs laws are usually nuanced and complex, it is therefore critical to engage with legal counsel that holds a deep expertise in both (i) FCA defense, and (ii) international trade & customs law.  These compliance issues particularly benefit from experienced Customs counsel, since the legal issues can be complex and nuanced.   

FCA Penalties

The minimum and maximum FCA penalty amounts are subject to regular re-indexing for inflation.

• In 2016, the minimum per-claim penalty increased from $5,500 to $10,781. (*applicable to violations between November 3, 2015 to February 2, 2017) In 2017, those amounts increased from $10,781 to $10,957. In 2018, the penalties increased to $11,181. Similarly, the maximum per claim penalty increased in 2016 from $11,000 to $21,563, and then again to $21,916 in 2017. In 2018, the maximum increased again to $22,363.

• In 2019, the statutory per occurrence minimum/maximum penalty amounts are $11,463 / $22,927.

FCA/Customs News:

April 24, 2026: DOJ: Press release: Fitness company agreed to pay $2.1 million to settle False Claims Act allegations as to undervaluation of imported goods:

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