DOJ complaint underscores Trump administration’s use of the FCA to enforce US trade laws

The facts

On July 15, 2025, the US Attorney’s Office for the District of South Carolina filed a complaint under the FCA against Global Office Furniture, LLC (GOF), a South Carolina-based furniture company, and its owner, Malcolm E. Smith. The complaint alleges that defendants GOF and Smith executed a multi-year scheme to evade paying more than $2 million in customs duties on merchandise imported from China.

GOF imports and sells office chairs manufactured by Global Furniture (Zhejiang) Co., Ltd. (Global Furniture), a Chinese manufacturer. Smith, GOF’s founder and president, previously worked as a US-based sales representative for the Chinese manufacturer. In 2013, GOF began selling office chairs from Global Furniture on an online retail website.

In September 2018, the US Trade Representative (USTR) imposed a 10% tariff on an assortment of merchandise imported from China pursuant to Section 301 of the Trade Act of 1974. Such merchandise included products manufactured by Global Furniture and imported by GOF. In May 2019, the USTR increased the rate of Section 301 tariffs from 10% to 25%.

According to the complaint, between 2019 and 2023 – and to evade the Section 301 tariffs on Chinese imports – GOF allegedly engaged in a “double invoicing” scheme by underreporting the value of imported office chairs. The scheme involved GOF creating two sets of invoices for its imported merchandise: one reflecting the actual transaction value and used for customer billing; and another that had significantly lower prices and was submitted to CBP for purposes of assessing the applicable tariff rate. This practice allegedly enabled GOF to avoid paying more than $2 million in tariffs. The government further alleges that Smith and GOF attempted to delete emails and documents related to furniture pricing after being notified of a federal investigation.

The alleged conduct occurred prior to the most recent round of tariffs, but the whistleblower qui tam complaint alleging FCA violations that originated the case was filed under seal by GOF’s former office manager in March 2020, more than five years ago and during the last year of the first Trump administration. The DOJ formally intervened in the FCA lawsuit in April 2025, a move that reflects the current DOJ’s heightened focus on customs enforcement, even with respect to historical violations only.

The government’s complaint charges defendants GOF and Smith with concealing or improperly avoiding or decreasing obligations to pay money to the government, making or using false records or statements material to an obligation to pay money to the government, and unjust enrichment.

On July 20, 2025, just days before this complaint was filed, the DOJ announced a major restructuring of its fraud enforcement efforts and the creation of the Market, Government, and Consumer Fraud Unit (MGCF Unit) within its Criminal Division’s Fraud Section. The MGCF Unit consolidates civil and criminal enforcement resources to focus on trade fraud and tariff evasion, underscoring the administration’s commitment to enforcing compliance with US trade laws. Moreover, in a May 2025 memo, the head of the DOJ’s Criminal Division released a memorandum identifying “trade and customs fraud, including tariff evasion[,]” as the DOJ’s number-two corporate criminal enforcement priority.

False Claims Act

The FCA, codified at 31 U.S.C. §§ 3729-3733, is a federal statute that enables the US government to recover losses resulting from fraud. It holds individuals and entities liable for knowingly submitting false claims for payment to the government. Violators of the FCA may be required to pay up to three times the government’s damages, plus an additional civil penalty.

The FCA also includes a qui tam provision that allows private citizens – often whistleblowers – to file FCA lawsuits on behalf of the government and to potentially receive significant monetary awards for successful lawsuits. Many DOJ investigations and complaints originate from these qui tam actions.

Key takeaways and guidance for companies

This complaint and the recent creation of the DOJ’s MGCF Unit reinforces the DOJ’s and the Trump administration’s shared focus on using the FCA to prosecute trade fraud and tariff evasion, including with respect to historical violations such as those alleged against GOF, which violations allegedly began more than five years ago and ended prior to the current administration.

To ensure readiness in the event of external review, companies should proactively assess their tariff exposure and document key decisions relating to tariff compliance. Additionally, companies should recognize the risk of internal whistleblowers as employees with access to import documentation and pricing data may bring FCA claims if they suspect misconduct.

Among other next steps, companies engaged in international trade should:

• Maintain comprehensive documentation for all customs filings and transactions, ensuring consistency across all invoices.
• Properly memorialize reasonable customs-related decisions that result in a lower tariff exposure for imported products, such as properly reclassifying goods or providing a dutiable value to CBP other than the actual transaction value of the purchased goods, as permitted under CBP regulations under certain circumstances.
• Review and update compliance programs to address tariff- and customs-related risks.
• Conduct regular internal audits to identify and correct discrepancies in import operations.
• Provide ongoing training for employees involved in import activities on customs regulations and FCA-related risks.
• Promptly investigate whistleblower complaints and ensure thorough follow-up.
• Consider voluntary disclosure to the DOJ or CBP in cases of customs or tariff violations to potentially reduce penalties and demonstrate cooperation, even with respect to historical violations only.

For questions about tariff compliance and other preventive measures, contact your regular McDermott lawyer or the authors.