A complaint filed recently by the Department of Justice highlights the work being done by the interagency Trade Fraud Task Force to ?ggressively pursue enforcement actions,?including criminal ges, against those who seek to evade tariffs and other duties. According to a DOJ press release, a foreign company, its co-owner, and two other employees have been ged with engaging in at least two schemes to illegally evade more than $86 million in customs duties and tariffs on more than $1.2 billion in imports into the U.S.: (1) transshipping goods through a third country that has a bilateral free trade agreement with the U.S. and falsely claiming that the goods were manufactured there, and (2) shipping scrap items from the U.S. to that third country, falsely claiming that they simply needed to be assembled or finished there, and then swapping those items for products made in the first country, claiming those products were made in the U.S., and shipping the products to the U.S. The DOJ complaint notes that one of the companies involved asked a customs broker whether the second scheme was permissible. The broker then asked an official with U.S. Customs and Border Protection, who said that (1) it would not be verifiable that the U.S.-originated scrap was used in the finished products and (2) turning scrap from the U.S. into a finished product in a foreign country would substantially transform it and rer the finished product subject to tariffs. The CBP official concluded that companies engaged in such a scheme would be ?reading on thin ice,?but those involved continued with it anyway. The DOJ states that the defants face up to 20 years in prison and a maximum fine of either $250,000 for the individuals or $500,000 for the company or twice the gain or loss from the offense, whichever is greater.
