Last month, the Department of Justice launched a cross-agency Trade Fraud Task Force. The Task Force will draw resources from the Department’s Civil and Criminal Divisions and the Department of Homeland Security to “aggressively pursue enforcement actions” against tariff violators, smugglers, and “importers and other parties who seek to defraud the United States.”
Miller & Chevalier
The Department’s enforcement efforts under the Task Force will include actions under the Tariff Act of 1930, the federal False Claims Act (FCA), and parallel criminal prosecutions, penalties, and seizures under Title 18 federal criminal statutes.
The Department also invited whistleblowers to report unfair trade practices and fraud, including by making use of the False Claims Act’s qui tam provisions to bring lawsuits against tariff violators on the government’s behalf. Acting Assistant Attorney General Matthew Galeotti, said that the Criminal Division, led by the Fraud Section, “is committed to using every available tool to hold bad actors accountable and prevent the theft of money intended to reduce the deficit and fund government programs.”
In a recent litigation alert, attorneys at Miller & Chevalier wrote that the Task Force “will substantially increase scrutiny of trade practices, and companies dealing with imported goods are advised to redouble their supply chain due diligence, even if they are not acting as the importer of record themselves.”
“As competitors, employees, and customers act as potential whistleblowers to an aggressive Department, ignorance of links in the supply chain can have significant consequences.”
One of the authors of that Miller & Chevalier litigation alert is Bradley Markano. Markano concentrates his practice on representing corporations and executives in complex civil litigation, white collar criminal defense, and investigations.
He has particular experience in investigations and litigation arising from allegations of fraud against the government, including cases brought under the False Claims Act.
How has False Claims Act work changed under the second Trump administration?
“The administration has been very clear that it intends to use the Federal False Claims Act in order to enforce its policy preferences,” Markano told Corporate Crime Reporter in an interview last week. “We haven’t really seen that from prior administrations. So while we are still seeing many of the same types of False Claims Act cases that we’ve been seeing over the last decade, particularly large cases targeting pharmaceutical corporations and large dollar value settlements and judgments related to alleged health care fraud, we’re also seeing like never before efforts to target industries or behaviors that are contrary to the government’s current policy priorities. So we’re seeing that in trade and customs enforcement. We’ve also seen that in the executive orders related to DEI and university policies.”
“The government’s been very clear about this intention to use the False Claims Act to enforce those priorities.”
Is the flip side of that that you’re seeing a downturn in health care related False Claims Act cases?
“I have not seen that so far and I’m not aware of that kind of downturn taking place. The Department of Justice is very competent in investigating those cases, and whistleblowers and plaintiff side law firms that represent them are very experienced in bringing them. It may be too early to say right now, but given the Department of Justice’s continued emphasis on the False Claims Act as an enforcement vehicle and their experience with those cases, I’d expect those to continue.”
You co-authored a litigation alert on the new Trade Fraud Task Force. Sketch for us what that is and what impact you foresee it having.
“Last week, the Department announced that it was launching this new cross agency, Trade Fraud Task Force. It’s a partnership involving the Department’s Civil and Criminal Divisions as well as the Department of Homeland Security. The Department said they wanted to aggressively pursue enforcement actions in the area of tariffs and custom violations. There was something similar under the first Trump administration. But what we’re seeing here now is a formal cross agency entity designed to further cooperation between the Department of Justice and the Department of Homeland Security to bring those types of cases.”
Is your practice primarily a corporate practice?
“I primarily represent corporations, but not exclusively. Sometimes we’ll do work involving officers accused of violations. But historically, my practice has been primarily corporate.”
What does a typical trade fraud case look like?
“The trade fraud cases that we see have primarily been brought against the importer of record,” Markano said. “You’ll see cases about alleged false statements on import forms, including misrepresentations about the country of origin for the goods being imported, about the trade classification, about the value of the goods that are being imported. Those are the typical types of misrepresentations we see in these cases. There have been actively litigated false claims cases on these topics that established a framework for the Department to pursue these cases.”
“Now that we’re seeing more aggressive investigations and potentially more aggressive use of criminal fraud statutes to bring these cases, I would expect that that template might be changing.”
“We frequently give advice on trade issues to importers and to companies that have concerns about their supply chains and about compliance with tariffs. We often get inquiries from companies that have either heard from the Department of Justice, or they just have heard from internal reports that there may be a concern, and ask us to assess potential for liability. Sometimes we find out months later that a case is pending.”
Would you anticipate that some of the cases might involve tariff violations? And there is a constantly shifting legal landscape on tariffs, with judges putting some of them on hold and upholding others,
“Will these investigations involve tariff violations? I think the answer is that it’s virtually certain that they will. Those are clearly a priority, if not the top priority, for this administration. And you’re right – it’s a tremendously confusing landscape right now. Just a little more than a week ago, the Court of Appeals struck down the emergency tariffs issued by the Trump administration, but the court didn’t enjoin those. That means that although there were the orders that found that they were unlawful, they still remain in effect. Businesses have to comply with them until the Supreme Court says otherwise.”
“The tariffs themselves, and the executive orders that are implementing them, change frequently, and that has created a lot of challenges for companies seeking to comply with them. I know a lot of our clients are working hard to build up their compliance infrastructure and make sure they’re staying on the right side of the law.”
Let’s pull back a little bit and look at the False Claims Act generally. There are some companies that argue that the qui tam provisions are unconstitutional. You address this in your litigation alert in July – Janssen’s appeal of a $1.6 billion False Claims Act verdict raises constitutional question.
“A judge in the Middle District of Florida found that the False Claims Act qui tam provisions, which authorized private citizens to stand in the shoes of the government and pursue damages on behalf of the government, were unconstitutional.”
“The finding was that the qui tam provisions violate the appointments clause of the Constitution, and so they violate the limitations on executive authority in the Constitution. That case is currently on appeal to the Eleventh Circuit. There have been some prominent dissents from courts of appeals that have taken the same argument. But most importantly, these cases are coming because Justice Clarence Thomas has signaled on a couple of occasions that he believes that the qui tam provisions exceed constitutional authority and that they’re unlawful. Most notably there was a major decision by the Supreme Court a couple years ago that had to do with the qui tam provisions. Justice Thomas dissented and said – we’re not addressing it here, but we’d be open to a case that raised this question more squarely.”
“I believe two other justices have also joined these opinions and indicated they believe the qui tam provisions are not constitutional. So it’s not clear whether we have enough Supreme Court justices to get to that point. The qui tam provisions have been in place for a very long time. The False Claims Act is a very old statute, so there’s quite a lot of precedent supporting those provisions.”
“Qui tam relators are now permitted to do this. But that is certainly a question that everyone is watching right now, and everyone’s going to be watching that appeal as it goes up to the 11th Circuit for oral argument fairly soon.”
The argument is that only the President can appoint officers of the United States, and that by giving whistleblowers the power to bring these cases, that effectively violates the clause?
“That’s right. The question is whether these qui tam relators are exercising executive authority, the type of power that’s reserved for the executive branch of the government. The Janssen decision involved a recent damages award that exceeded something like well over a billion dollars.”
“The False Claims Act is often called a quasi criminal statute because the damages available under it are so tremendous. The law allows treble damages – three times the amount of harm plus civil penalties. The damages can be astronomical. These are the types of penalties you typically see in a criminal case. But instead of having criminal prosecutors enforce these, what you have are private citizens represented by private law firms. When you see a damage award like the one in the Jansen case there, I think there is a strong argument to be made that this is executive authority. This is the sort of power that’s for the executive branch to exercise, and not something typically allowed for private citizens.”
But couldn’t the same argument be made for any tort lawsuit in a state that has punitive damages? A lawyer is bringing a case on behalf of a client against a major corporation, and often they result in massive punitive damages. So if we go down that road, aren’t we threatening the entire civil justice system?
“There’s something to that, particularly with modern mass tort cases, where you’ve got sometimes poorly defined class action seeking damages for societal harms, using litigation to conduct what were historically more in the realm of the legislature than the court.”
“I think the big distinction under the False Claims Act is the qui tam relator is not someone with independent standing. They don’t typically have private injury that would authorize them to bring that case. They’re only authorized on a statutory basis because they’re standing in the shoes of the government and acting on the government’s behalf, and that’s why that executive appointments clause becomes a little more salient under the Constitution.”
But in many of these qui tam cases, the Justice Department intervenes.
“Yes, when the government joins the case, when the government intervenes, that very often results in a settlement. But in many cases, the Department chooses not to intervene in a case. And the relator proceeds on their own. Some of them are dismissed. Some of them result in settlements. Some of them go all the way to trial. But when the Department elects to intervene, that can put a lot of pressure on the parties involved to reach a settlement rather than proceed against the Department of Justice.”
If the Supreme Court throws out the qui tam provisions of the False Claims Act, wouldn’t that pretty much put an end to the practice in this area?
“It would put an end to quite a lot of the plaintiff side practice in this area. But the Department would still have the authority to bring these cases. The Department’s pilot whistleblower program already offers incentives to whistleblowers, sometimes very substantial financial incentives to whistleblowers whose information results in a settlement or judgment. And we are seeing increasing use of incentives to get whistleblowers to come forward.”
“The Department is equipped to bring these cases, but there’s no question that the majority of these cases are initially brought by whistleblowers, and that the qui tam provisions and the incredibly large incentives that they offer to whistleblowers – as you know, they can get a substantial share of a judgment or settlement – that’s a major factor that led to this being such a big area of law right now.”
If the Supreme Court rules the qui tam provisions unconstitutional, then the practice could revert back to an SEC whistleblower practice where the whistleblower calls the hotline, files a complaint and just waits and sees if the SEC moves on it.
“Yes. It would very much put the onus for the investigation on the Department of Justice. And the Department is increasingly competent to parse large amounts of data to evaluate whistleblower complaints, including for complex claims in the healthcare and government contract space. But it would certainly put a lot more burden on the Department of Justice to investigate and go forward.”
[For the complete q/a format Interview with Bradley Markano, see 39 Corporate Crime Reporter 35(12), September 15, 2025, print edition only.]