New York Customs Fraud Reporting and Penalties

Any individual with knowledge of customs fraud can report it to the relevant authorities. While the focus is on large-scale commercial fraud, a wide range of activities qualify for reporting. These activities are subject to legal scrutiny and may be punishable under federal law, even if they occur within New York.

• Undervaluation: Declaring a lower value for goods than their actual transaction value to reduce customs duties.
• Misclassification: Intentionally misclassifying goods under a different Harmonized Tariff Schedule (HTS) code to secure a lower duty rate.
• False Country of Origin: Providing a false country of origin to evade tariffs, such as anti-dumping or countervailing duties.
• Illicit Importation: Importing goods without the required permits or licenses.
• Circumvention: Using deceptive practices to avoid trade remedies like anti-dumping or countervailing duties.

Under federal law, individuals who provide original information leading to the recovery of duties, taxes, or penalties may be eligible for a reward. This reward system is designed to encourage individuals to come forward with valuable information that assists in the enforcement of customs laws.

The reward program is outlined in 19 U.S.C. § 1619, which authorizes the Secretary of the Treasury to pay a monetary reward to any individual who provides information that leads to the seizure of goods or the recovery of a fine, penalty, or forfeiture. The amount of the reward is based on the amount recovered and the quality of the information provided, up to a maximum of 25% of the net amount recovered, capped at $250,000. For violations involving certain anti-dumping or countervailing duties, the reward can be up to $500,000.

The primary legal basis for prosecuting customs fraud is found in federal statutes, including Title 18 and Title 19 of the U.S. Code. Penalties can vary significantly depending on the nature and scale of the fraud.

Civil Penalties:

• 19 U.S.C. § 1592: This statute addresses fraud, gross negligence, and negligence. Penalties can range from a fine equal to the value of the goods (for negligence) to an amount up to the domestic value of the goods (for fraud).
• Civil Forfeiture: In many cases, the goods themselves can be seized and forfeited to the government.

Criminal Penalties:

• 18 U.S.C. § 545: This statute covers the fraudulent or illegal importation of merchandise. A conviction can result in a fine and up to 20 years in prison.
• 18 U.S.C. § 542: This statute deals with entry of goods by means of false statements. It carries a penalty of up to two years in prison and a fine.
• Conspiracy (18 U.S.C. § 371) and Money Laundering (18 U.S.C. § 1956): These charges can also be brought in conjunction with customs fraud, significantly increasing the potential penalties.

The severity of the penalty for customs fraud is often determined by the intent of the perpetrator and the value of the goods.

• Fraud: Intentional acts of misrepresentation, such as knowingly filing false documents, can lead to the most severe penalties, including criminal prosecution and substantial fines.
• Gross Negligence: A pattern of careless behavior that demonstrates a disregard for customs regulations can still result in significant civil penalties.
• Negligence: A simple mistake or clerical error may lead to lesser penalties, but it is still a violation of customs law and can result in the assessment of additional duties and fines.

A table outlining common penalties is provided below:

Before filing a report, a legal review can help ensure that the information meets the legal requirements for a successful claim. An experienced attorney can evaluate the strength of your case, verify the factual accuracy of the information, and advise on the best course of action to protect your identity and maximize the potential for a reward.

For businesses or individuals facing a customs fraud investigation, a swift and well-informed legal defense is essential. A lawyer can:

• Advise on voluntary disclosure: In some cases, voluntarily disclosing a violation can mitigate penalties.
• Negotiate with CBP: An attorney can represent you in negotiations with customs officials to reduce fines and avoid criminal charges.
• Develop a defense strategy: If the case proceeds to litigation, a lawyer can build a robust defense to challenge the government's claims.

Seeking legal counsel is a critical step for anyone involved in a customs fraud case, whether as a reporter or a subject of an investigation.