Customs Enforcement Heats Up: What Importers Need to Know

Newsletter

8.10.2026

A recent criminal case in Chicago highlights the administration’s commitment to pursuing criminal charges against individuals and companies involved in unlawful tariff evasion. This criminal case is just the latest in a string of actions and announcements underscoring the government’s commitment to aggressively pursuing civil and criminal enforcement actions to deter tariff evasion. Importers without a customs compliance plan are playing with fire as the administration continues to show that trade enforcement is a top priority, and the penalties now extend beyond those traditionally employed by U.S. Customs and Border Protection (“CBP”).

The Kapadia Case

In June 2026, Ravi Kapadia was sentenced to 10 months in federal prison by an Illinois District Court Judge for Kapadia’s role in a conspiracy to defraud the United States by evading customs duties.¹

Kapadia’s scheme was straightforward in concept but significant in scale. Kapadia fraudulently imported gold jewelry from various countries while falsely declaring to CBP that the jewelry originated in Oman. It is estimated that Kapadia’s actions allowed him to evade more than $1.89 million in U.S. customs duties from June 2019 to April 2020.

Kapadia pleaded guilty in October 2025 to conspiracy to defraud the United States and to enter goods by means of false statements and has now been sentenced to 10 months in federal prison for his role in the conspiracy.

Announcing the sentencing, U.S. Attorney Andrew S. Boutros of the Northern District of Illinois emphasized the government’s commitment to pursuing trade fraud: “Trade fraud, like the conspiracy perpetrated in this case, deprives the United States government of vital revenue and undermines consumer confidence . . . Trade compliance is critically important to not only our region’s economic security and public safety, but also that of our entire nation’s.”

Executive Order 14411: “Strengthening Customs Enforcement”

The Kapadia case comes in the backdrop of President Trump’s June 2026 Executive Order 14411, “Strengthening Customs Enforcement,” (the “EO”) which declared that reform of the U.S. customs enforcement system is “long overdue” and directed DHS and CBP to implement sweeping reforms through rulemaking within defined timelines.² The provisions of the EO that relate to enforcement are briefly summarized below.

Heightened Requirements for Importers of Record (“IORs”)

Within 180 days, DHS must revise importer eligibility requirements. Specifically, the EO directs DHS to require that:

IORs maintain a minimum level of tangible domestic assets, bonding, or both, with increased minimum bond coverage;
IORs be designated and reported to CBP with bond/assets for all formal and informal entries;
IORs provide additional data including anticipated import volumes, year organized, ownership and beneficial ownership disclosures, business affiliation disclosures, domestic asset disclosures, and any other data that CBP deems necessary;
A “good standing” requirement will apply to all IORs based on compliance history; and
Enhanced vetting for all individuals and entities conducting import activities.

New Import Disclosure and Certification Requirements

The EO imposes heightened disclosure obligations, including:

Certifying compliance with critical supply chain requirements;
Disclosing foreign tax and global business identifiers;
Providing detailed supply chain and production information; and
Requiring submission of documentation that the foreign exporter was required to submit to its own customs administration.

Enforcement and Penalties

The EO directs maximum enforcement of customs laws and includes the following measures:

A 50% minimum penalty floor (absent exceptional circumstances impacting national security);
A minimum liquidated damages floor;
Elimination of mitigation for repeat offenders;
Prioritized enforcement targeting forced labor, misclassification, undervaluation, and illegal transshipment;
Maximum penalties for noncompliant customs brokers;
Increased audits and enforcement of liquidated damages claims; and
Restrictions on in-bond utilization.

CBP noted that noncompliant actors have historically treated penalties as a “cost of doing business” and routinely sought mitigation, emphasizing that the updated mitigation process is necessary for deterrence.³

The Aggressive and Broad Push for Customs Enforcement

The Kapadia prosecution is not an isolated case. It reflects an aggressive and broad push for customs enforcement targeting customs fraud and trade violations in furtherance of President Trump’s June 2026 Executive Order 14411.

Most recently, in July 2026, the Department of Justice (“DOJ”) and the Department of Homeland Security (“DHS”) co-published a document titled “A Resource Guide to Trade Fraud Enforcement”⁴ (the “Guide”) which details the government’s enforcement approach to customs and trade fraud. The Guide signals an aggressively heightened posture, cataloging the full range of available enforcement tools—from CBP administrative penalties under Section 592, to Civil False Claims Act treble damages, to criminal prosecution, to RICO—and emphasizing that liability extends beyond importers to anyone in the supply chain who knowingly facilitates the transportation or sale of goods imported contrary to law.

For companies, the core message is blunt: “The era when a company can claim ignorance of its upstream partners’ activities is over.” The Guide expects every supply chain participant to actively audit partners, avoid willful blindness to market conditions or sources of supply, and maintain a compliance culture from the logistics floor to the boardroom. The DOJ warns it will scrutinize whether compliance failures reflect negligence, reckless disregard, willful blindness, or intentional criminality. The enforcement examples cited in the Guide—including a $549.5 million AD/CVD evasion settlement, a $1.6 billion emissions-fraud resolution, and multi-year prison sentences for duty evasion conspiracies—leave little doubt that the government intends to back these expectations with severe consequences.

Importers—or those in the downstream purchase, distribution, or resale of imported goods—should treat the Guide’s publication as a prompt to reassess their trade compliance programs, supply chain due diligence practices, and internal reporting protocols.

Key Takeaways/What Importers Should Consider Doing Now

In light of these developments, importers should consider the following steps:

Audit your compliance program. Audit current compliance programs against the Guide’s expectations, particularly regarding supply chain auditing, partner verification, and escalation protocols.
Prepare for broader enforcement. Prepare for a broader use of enforcement mechanisms including traditional CBP methods, the False Claims Act, and criminal prosecutions.
Review classification and valuation practices. Review and audit current import classification and valuation practices. The 50% minimum penalty floor makes errors significantly more costly.
Verify country-of-origin documentation. Assess country-of-origin documentation and supply chain transparency. The Kapadia case underscores the enforcement focus on false origin declarations. Companies should verify that certificates of origin and supporting documentation are accurate and defensible.
Evaluate customs broker relationships. Review relationships with customs brokers. Brokers face increased due diligence obligations and penalty exposure under the new framework. Companies should ensure their brokers are prepared to meet these heightened standards and should assess whether broker arrangements adequately allocate compliance responsibilities.

Quarles will continue to monitor these developments and their implications on importers and others in the supply chain. If you have questions, or wish to take any of the above-reference steps, please contact your Quarles attorney or: