DOJ Diverts More Resources to Trade Enforcement, Expands Major Frauds Unit
DOJ's criminal division has identified trade fraud as a top priority, assigning its market integrity and major frauds unit to handle tariff evasion cases, a DOJ official confirmed to us. The official said that the major frauds unit is shifting resources to trade and looking to cases involving "long-running frauds, senior executives, and large volumes of alleged losses from unlawful tariff evasion schemes."
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As initially reported by Bloomberg Law, the unit had around 35 lawyers in 2024 and is expected to add "significant personnel" from a consumer protection branch that will be transferred to the criminal division. The market fraud unit is led by Lucy Jennings, a former prosecutor in Los Angeles, and will be renamed the market, government, consumer fraud unit.
The shift in personnel aligns with a DOJ memo from May identifying trade and customs fraud as one of the agency's 10 priority areas for enforcement.
Attorneys at Morgan Lewis said that, as the U.S. "tariff strategy continues to evolve," they expect to see an "increase in tariff evasion schemes that test DOJ's ability to police the president's tariff agenda." As a result, "DOJ will be looking to aggressively prosecute these schemes" and may lead to more team-ups between DOJ and CBP, the attorneys said. For instance, there's been a "noticeable increase in civil investigative notices from DOJ on trade issues," the attorneys said.
Enforcement also is bolstered by private parties' ability to bring whistleblower cases under the False Claims Act and CBP's encouragement to parties to use its e-Allegations portal, which lets parties "report issues regarding import noncompliance," the Morgan Lewis attorneys said.
Attorneys at Crowell & Moring said that, in response to the increased trade enforcement, importers should conduct routine audits of their country of origin determinations and markings, assign proper customs values by "capturing dutiable costs," assess lawful opportunities to reduce dutiable value, eliminate riskier valuation practices such as "double invoicing," ensure third part due diligence compliance, review Harmonized Tariff Schedule classifications to ensure correct and optimal codes apply, and map supply chain patterns.