DOJ Trade Fraud Task Force Reaches First Corporate Resolution

On December 18, the U.S. Department of Justice resolved a criminal trade fraud investigation into a New York-headquartered global distributor and its subsidiaries under Part 1 of the Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy.  Under Part 1 of the policy, “when a company has voluntarily self-disclosed misconduct to the Criminal Division . . . fully cooperated, and timely and appropriately remediated, all in accordance with the standards set forth . . . there will be a presumption that the company will receive a declination absent aggravating circumstances involving the seriousness of the offense or the nature of the offender.”  Part 1 also requires disgorgement and/or restitution to be paid that results from the misconduct. 

As part of the resolution, DOJ declined to prosecute MGI International for falsifying customs declarations and credited $6.8 million that its subsidiaries, Global Plastics LLC and Marco Polo International LLC, previously paid for knowingly failing to pay customs duties in violation of the False Claims Act.  The day prior, the company’s COO pled guilty to conspiring to smuggle goods into the United States.  

After US weather events disrupted the domestic resin market in 2021, MGI International subsidiaries Global Plastics LLC and Marco Polo International LLC sourced from other countries, including China, with imports subject to an additional 25% duty rate.  In 2024, MGI disclosed its subsidiaries failures to pay customs duties on Chinese imports to DOJ.  As a result, Global Plastics and Marco Polo agreed to pay $6.8 million in July to resolve civil liability under the False Claims Act.   

The resolution was largely based on the company’s timely and voluntary self-disclosure regarding the failure to pay customs duties in 2024 and subsequent full cooperation with DOJ.  DOJ also noted the company’s internal remediation efforts, including termination of and disciplinary actions against employees involved in the scheme, internal review of the misconduct and the company’s compliance monitoring, and efforts to enhance its compliance program.  Because of this, MGI International was “credited” the $6.8 million it had previously paid to resolve its liability under the False Claims Act, as opposed to paying an additional fine under the resolution. 

This marks the first resolution from DOJ’s new Trade Fraud Task Force.  The resolution demonstrates that DOJ will bring cases against corporations that are found to evade tariffs and duties, but it also underscores the benefits of self-disclosure, remediation, and a commitment to compliance. 

Additional author: Lilly Brown