Expect More FCA Enforcement of Customs Fraud, Attorneys Say
The U.S. could use the False Claims Act to more aggressively combat tariff evasion, attorneys at Ropes & Gray said in a Feb. 3 alert. Companies should "carefully scrutinize their import policies and procedures to ensure they are adhering to all applicable laws," the firm said, adding that importers should ensure that they have "appropriate avenues" for internal and external parties to bring confidential reports to the company's attention.
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Attorneys Amy Kossak, Megan Lenz and Emerson Siegle said the FCA, which bars the "knowing and improper avoidance of any obligation to pay money to the federal government," is used by DOJ and private whistleblowers to prosecute customs fraud. The statute was put under the "spotlight" after Michael Granston, deputy assistant attorney general, told attendees at an FCA-focused conference that the law is a "powerful tool in the government’s arsenal for combating evasion of customs duties owed to the U.S. government."
The three attorneys said Granston's comments "read as a direct invitation to these plaintiffs’ lawyers to seek out and bring FCA claims based on customs duty evasion." The alert noted that while President Donald Trump seems keen to downsize the federal government, FCA proceedings could stand as a robust avenue for customs enforcement, given that cases can be brought by private parties.
"As a result, companies may face an ever increasing number of FCA claims premised on (actual, suspected, or speculative) efforts to evade the sweeping new tariffs and the corresponding substantial costs they impose on international supply chains," the alert said. "Even if the claimed customs fraud is unsupported, defendants may need to engage in motions practice to eliminate specious whistleblower claims."