On March 25, 2025, the U.S. Department of Justice (DOJ) announced that it had reached an $8.1 million settlement in a civil False Claims Act (FCA) case based on alleged customs violations by defendants Evolutions Flooring Inc. (Evolutions), a San Francisco-based importer of wood flooring, and its owners Mengya Lin and Jin Qian. United States ex rel. Urban Global LLC v. Struxtur Inc., et al., No. 20-cv-7217 (C.D. Cal.).

This settlement is the latest in a series of multi-million-dollar settlements and judgments obtained by DOJ in civil FCA cases based on alleged customs fraud. As reported previously, these cases are likely to become more frequent as DOJ makes trade enforcement a key area of focus. Congressional support for such prioritization is building, as earlier this month Representative Ashley Hinson (R-IA) sponsored the Protecting American Industry and Labor from International Trade Crimes Act (H.R. 9151), which would establish a DOJ task force to combat trade crimes, provide training and assistance to other federal, state, and local law enforcement agencies, and require the attorney general to submit an annual report to Congress on the DOJ's efforts. The legislation is co-sponsored by Representatives John Moolenaar (R-MI) and Raja Krishnamoorthi (D-IL).

The complaint in Urban Global, unsealed on March 20 after DOJ provided notice that it was intervening in part for purposes of settlement, shows how DOJ and relators may formulate such cases. Evolutions and its owners were accused of knowingly evading customs duties, including antidumping duties, countervailing duties, and section 301 tariffs, on wood flooring manufactured in the People's Republic of China (PRC). Acting at the direction of its owners, Evolutions allegedly mispresented the country of origin of certain flooring imports – declaring them as Malaysia-origin – to avoid the high duties applicable to China-origin products. Evolutions also allegedly falsely declared the true manufacturer of the imported merchandise. The complaint did not contain specific evidence of scienter beyond the alleged inaccurate statements on customs documents. 

During the five-year period before the case was unsealed, CBP actively participated in the investigation. DOJ reports that CBP's efforts included visits to factories in Thailand, detaining shipments for review by CBP experts on multilayered wood flooring, analysis of import records by the Office of Trade Regulatory Audit (TRA), and participation in witness interviews.

The settlement is also a reminder that whistleblower actions can arise from competitors as well as from within an organization. The qui tam relator, Urban Global LLC, was a competitor of Evolutions, rather than a corporate insider. In addition to the false statements on customs forms, the relator's investigation included internet searches which allegedly confirmed that the Malaysian manufacturers identified on customs forms did not have physical offices or warehouses at locations declared by those entities. As relator, Urban Global will receive approximately $1,215,000 in settlement proceeds. 

The Urban Global investigation and settlement is just the latest example of the risks resulting from enforcement scrutiny on trade practices. Companies and their owners should proactively take steps to prepare, including reviewing their trade compliance programs, document retention and communication policies, and protocols for response to a subpoena or search warrant. Companies should also remember that the FCA applies to reckless violators who "hide their heads in the sand" rather than addressing trade violations that they reasonably should have been aware of. 

Miller and Chevalier advises clients on their needs related to trade compliance, trade policy, and criminal defense. We regularly defend companies in civil and criminal customs enforcement proceedings, and import/export seizures. Similarly, when a company independently discovers an error in its import transactions, we have experience providing assistance in evaluating the matter and preparing voluntary disclosures to CBP. To learn more about our Customs & Import Trade practice, click here, and our White Collar Defense practice, click here.

For more information, please contact:

Joshua Drew, jdrew@milchev.com, 202-626-5811

Richard A. Mojica, rmojica@milchev.com, 202-626-1571

Bradley E. Markano, bmarkano@milchev.com, 202-626-6061

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