Trade Fraud Costs the U.S. Government Millions Each Year

Trade Fraud Costs the U.S. Government Millions Each Year

Trade fraud occurs when an importer of goods into the United States misrepresents information about the products being imported, thereby violating trade laws and evading importer duties. The U.S. government loses millions in revenue every year as a result of trade fraud.

Types of Trade Fraud

According to the study “Trade Fraud: The Wild, New Frontier of White Collar Crime” by Pamela Bucy Pierson and Benjamin Patterson Bucy, published in the Oregon Review of International Law, trade fraud cases fall into two types of fraud:

  • Misrepresentations regarding the nature of products imported:
    • Import duties are imposed based upon what is being imported and/or on the value or quantity of the goods.
    • To avoid or reduce the duties they would owe, importers committing trade fraud will falsify information about what they are importing, or understate the weight or value of their imports.
  • Misrepresentations regarding a product’s country of origin:
    • Certain import duties are imposed on designated products from certain countries, and the most common country and product specific duties are antidumping and countervailing duties.
      • Antidumping duties are designed to prevent foreign companies from “dumping” products into the U.S. market at a lower price than what the product is sold for in the country of origin. The duty assessed is the dumping margin, which is the amount by which the normal value of the product exceeds the export price.
      • Countervailing duties are designed to offset foreign government subsidies. Subsidies are common in non-market economies where the government owns certain industries or when a government pumps considerable resources into an industry.

Trade Fraud is Difficult to Detect

The study concludes that trade fraud is difficult to detect, prove, and deter: “There are $2.71 trillion of imports and 32.4 million trade entries into the United States each year. Imports arrive in the United States through 328 ports, 7,000 miles of land borders, and 95,000 miles of shoreline. Customs Agents inspect only a tiny percentage of these imports.”

Trade fraud is masked under large corporations, hidden by layers of complex electronic communications, and concealed by vast money laundering schemes.

After compiling and analyzing a database of trade fraud cases between 2000 and 2016, the authors conclude that the way to combat trade fraud is through “multi-agency efforts directed at trade fraud,” including the Department of Justice and its U.S. Attorney Offices, the U.S. Customs and Border Protection, the U.S. Immigration and Customs Enforcement Homeland Security Investigations, the Department of Homeland Security, the Department of Commerce and its International Trade Administration, and the International Trade Commission.

Further, the authors argue that “the Department of Justice should utilize the interagency task force model used successfully for decades by multiple U.S. Attorneys’ offices to combat health care fraud, another type of fraud that by its nature involves many investigative agencies and expertise.”

Defending Against Criminal or Civil Allegations of Trade Fraud

If you are facing criminal charges or civil allegations of trade fraud, you need an aggressive and experienced white collar defense attorney on your side.

Ashley D. Adams is a former fraud prosecutor with the United States Attorney’s Office. She understands how prosecutors operate. Given her prior work, she also has a longstanding and positive relationship with the U.S. Attorney’s Office, the Attorney General’s Office, and the Department of Justice. Put Ashley D. Adam’s experience to work for you.

Contact us or call now (480) 219-1366 for a case evaluation. Have your questions answered and obtain the peace of mind that comes from having a former Assistant U.S. Attorney on your side.