USA – TENNESSEE Trends and Developments Contributed by: Alex Little, Zack Lawson, Ted Canter and JR Glover, Litson PLLC
against importers and other parties who defraud the United States of tariffs and duties. The Task Force will co-ordinate efforts among the Department’s Civil and Criminal Divisions, as well as the Department of Homeland Security, to enhance enforcement against tariff evasion, goods misclassification, and smuggling of prohibited items. The Trade Fraud Task Force targets one of the other priority items from the Galeotti Memorandum – trade and customs fraud – which ranked just below waste, fraud, and abuse. The Task Force also follows the trend of cross-agency partnerships designed to pool resources around the Administration’s enforcement priorities, much like the Health and Human Services False Claims Act Working Group referenced above. The Civil Division will leverage the False Claims Act as a familiar weapon. Since March 2025, the DOJ has reached several significant settlements in key industries, showing what Tennessee companies face. An USD8.1 million settlement with a San Francisco importer resolved allegations of falsifying country-of- origin information to evade anti-dumping, counter - vailing and Section 301 tariffs on multi-layered wood flooring. A USD12.4 million settlement with a Dallas- based countertop supplier addressed a scheme to evade customs duties for quartz surface products from China. And a USD6.8 million settlement involving plastic resin imports notably came after the company self-disclosed the misconduct following an internal investigation – proof that voluntary disclosure can still mitigate exposure. The Criminal Division, meanwhile, is deploying its Fraud Section to use “every available tool” to hold bad actors accountable. Prosecutors typically charge commercial trade fraud under three statutes: 18 USC § 541 (entry of goods falsely classified), 18 USC § 542 (entry of goods by means of false statements), and 18 USC § 545 (smuggling goods into the United States). Fraud committed on exportation is often pros - ecuted under 18 USC § 545 (smuggling goods from the United States). Each of these qualify as speci - fied unlawful activities under the money-laundering statutes, and Homeland Security Investigations (HSI) encourages money-laundering charges in these types of prosecutions.
To date, the US Attorney’s Offices in Tennessee do not appear to have brought criminal or civil charges in this area with the assistance of the Task Force. But Tennessee businesses should not assume they will avoid scrutiny. In May 2025, several months before the Trade Fraud Task Force was announced, the US Attorney’s Office for the Western District of Tennes - see sentenced a Memphis man to two years in prison for trafficking counterfeit motor vehicle airbags. The defendant, a retired auto mechanic, imported coun - terfeit motor vehicle airbag parts from China and assembled the parts to make counterfeit airbags. He then sold the fake airbags on eBay to unsuspecting automobile repair shops. These types of cases were already in the enforcement pipeline, and they are not going anywhere. Given the complexity of tariff regulations and this intensifying enforcement focus, Tennessee companies should consider several steps now. First, audit com - pliance programmes to identify gaps in product clas - sification, valuation, country-of-origin determinations, and trans-shipment risks. Second, strengthen supply chain due diligence, particularly when working with suppliers in jurisdictions with lower tariffs or limited regulatory oversight. Third, investigate whistle-blow - er or hotline reports promptly to ensure inquiries are properly addressed. When violations are discovered, companies should carefully assess whether voluntary disclosure is appropriate – particularly in industries experiencing increased enforcement or where affect - ed goods originate from countries like China, which are drawing heightened scrutiny. The Trade Fraud Task Force suggests that we will see additional enforcement activity in this area. Tennessee companies would be wise to take notice. Conclusion The Department of Justice has not abandoned white- collar enforcement – it has refined it. Federal prosecu - tors across all three Tennessee districts are already bringing cases that align with the DOJ’s stated pri - orities. Companies that understand the government’s priorities, assess their risks honestly, and respond proactively to potential violations will fare better than those caught unprepared.
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