On August 5, 2026, the U.S. Attorney’s Office for the District of Maryland announced that a Taiwan-based, publicly traded manufacturer of light-emitting diodes and its U.S.-based subsidiary agreed to pay the United States $5.15 million to resolve allegations that they violated the False Claims Act (FCA), common law, and the Tariff Act of 1930 by “knowingly failing to pay duties owed on LEDs imported from China.”
According to the settlement announcement, the government alleged that between July 2018 and January 2022, the company “misrepresented Chinese-manufactured LEDs as originating in Taiwan” after routing them through Taiwan on their way into the United States, in order to avoid the Section 301 tariffs imposed on Chinese-origin goods. The settlement also resolved a second, subtler allegation: that from January 2022 through November 2025, the company continued importing LEDs from Taiwan without properly segregating the Chinese-origin component dice from Taiwanese-origin components during manufacturing, effectively failing to account for mixed-origin merchandise on the front end.
U.S. Attorney Kelly O. Hayes stated in announcing the settlement, “Companies that seek to import goods into the United States must comply with customs laws and pay the rightful duties owed,” adding that the office would “use all tools available to identify and hold accountable those who commit trade fraud by falsely identifying the country of origin of imported goods to pay lower customs duties than actually owed.” Customs and Border Protection’s (CBP) Executive Assistant Commissioner for the Office of Trade, Susan S. Thomas, added: “Trade fraud undermines the U.S. Government’s ability to collect the proper revenue, hurts legitimate companies, and puts American consumers at risk,” and that “trade fraud isn’t a victimless crime.”
As with several customs FCA cases resolved this year, a whistleblower gets credit for surfacing the conduct. The settlement resolves claims originally brought under the qui tam provisions of the FCA by a former employee of the company, who is set to receive $876,146 as his relator’s share of the recovery.
A Pattern, Not an Outlier
The policy backdrop here has been building for months: heavier Section 301 and country-of-origin scrutiny, more aggressive CBP enforcement referrals, and a Justice Department that has made customs duty evasion a standing FCA priority rather than an occasional case. The settlement described above is best read against that backdrop, and against the broader run of 2026 customs-fraud resolutions under the FCA. Here are some other notable settlements and a significant milestone.
Aluminum Extrusion Importer and Affiliated Warehousing Companies
Steel Importers and Company Executive
Two Canada-based steel companies and a part-owner and president of those companies agreed to pay $19 million to resolve allegations that they “knowingly and improperly” failed to pay duties owed on flat-rolled steel that was actually manufactured in Europe and Asia but declared as Canadian or American in origin. The government alleged that, from May 2019 through January 2025, the defendants misrepresented to CBP that the true country of origin was Canada or the United States, when they knew the steel actually originated in China, Indonesia, Italy, Turkey, or Vietnam. The case was brought by a relator who worked as a broker with the companies, and who will receive approximately $3,610,000 of the settlement. Assistant Attorney General Brett A. Shumate stated that “the Department of Justice will zealously pursue anyone who fraudulently evades the duties owed on steel products imported into this country.”
The Trade Fraud Task Force’s $1 Billion Milestone
Zooming out, DOJ and the Department of Homeland Security announced in July that the Trade Fraud Task Force, launched in August 2025, had “surpassed $1 billion in civil and criminal recoveries, penalties, forfeitures, and publicly charged losses in less than one year.” The announcement described the milestone as marking a “strategic pivot from administrative fines to criminal and civil accountability across the global supply chain,” and it specifically listed the aluminum extrusion matter described above and a separate customs resolution among the Task Force’s “high-impact matters.” Assistant Attorney General Colin McDonald of the newly formed National Fraud Enforcement Division stated that “for too long, fraud actors have viewed customs violations as a mere surcharge or cost of doing business,” and that the Task Force intends to make clear that “trade fraud is a serious economic crime.” The same announcement unveiled the new Global Trade & Commerce Enforcement Section and a joint DOJ-DHS Resource Guide to Trade Fraud Enforcement, both signals that this enforcement posture is institutional rather than episodic.
National Fraud Enforcement Division Memo Adds Global Trade and Commerce
In addition, on August 13, 2026, Assistant Attorney General Colin McDonald issued a memorandum outlining the enforcement priorities for the newly formed National Fraud Enforcement Division. Among the Division’s five priority areas (public trust and financial integrity, health care, internal revenue, global trade and commerce, and corporate misconduct) the trade-and-commerce priority speaks directly to the alleged conduct at issue in these settlements. The memo states that the Fraud Division will “lead the Department’s coordinated criminal enforcement strategy, targeting trade and customs violations and supply chains polluted by forced labor,” and that prosecutors will “focus on systemic, high-impact noncompliance that threatens our economic and national security.” It specifically calls out “illicit transshipment schemes, country-of-origin fraud, the undervaluation of imported goods designed to evade duties, sanctions evasion, and foreign forced labor schemes” as priority targets. Notably, the memo positions trade fraud enforcement within a broader reorganization that is expected to increase the Division to approximately five hundred attorneys and staff, with plans for continued expansion—a signal that the resources dedicated to customs-fraud investigations are likely to increase rather than plateau.
What This Means for Importers
Taken together, these 2026 resolutions—and the McDonald memo’s designation of global trade and commerce as one of five Fraud Division priorities—illustrate a broader trend since the Task Force was created last August: country-of-origin representations on CBP entry documents are increasingly becoming an exposure point for potential FCA liability, not merely a customs compliance matter. Each of these cases traces back to a similar fact pattern: a company (or its suppliers) allegedly declaring a country of origin that was not the true country of origin in order to avoid Section 301, antidumping, or countervailing duties, and each was set in motion, or substantially aided, by an insider who brought a qui tam suit.
For importers, four practical takeaways stand out from this most recent settlement, its 2026 companions, and the Fraud Division’s stated priorities:
First, the settlements suggest that transshipment through a low-tariff jurisdiction, even a jurisdiction as commercially unremarkable as Taiwan or Canada, may not insulate a company from FCA liability if the substantive manufacturing occurred somewhere else.
Second, mixed-origin or component-level sourcing (as in the later-period conduct described above involving unsegregated component dice) can create liability even without an intent to actively disguise origin, where a company fails to implement adequate controls to track and declare origin accurately.
Third, each of the settlements described above involved a whistleblower, several of them insiders or trading partners, suggesting that internal compliance gaps are increasingly likely to surface through litigation rather than solely through a CBP audit.
Fourth, the McDonald memo’s formal designation of global trade and commerce as a Fraud Division priority—with specific emphasis on transshipment, country-of-origin fraud, duty evasion, sanctions evasion, and forced labor—signals that the enforcement patterns visible in this year’s settlements are not ad hoc responses to individual bad actors but components of a declared, resourced, and permanent enforcement strategy.
Companies that import from, or through, any jurisdiction subject to Section 301, antidumping, or countervailing duties may want to consider treating country-of-origin certification and supply-chain documentation with a level of rigor comparable to tax reporting. The creation of a dedicated Global Trade & Commerce Enforcement Section, a Fraud Division on track to grow to five hundred attorneys and staff, and FCA relator awards large enough to incentivize insiders to come forward are likely to intensify scrutiny of importers.