The Federal prosecution of trade fraud and related activities is a multi-pronged effort with administrative, civil, and criminal aspects involved.
First, what Federal agencies are primarily responsible for such enforcement action?
The US Department of Justice is the trial arm of the Federal government, representing the United States in Federal District Court proceedings. It is a bifurcated agency in terms of its operation. It includes what is known as Main Justice in Washington, DC, and it also includes the operation of the US Attorneys’ Offices located throughout the United States.
Other major agencies include the Department of Homeland Security, the Office of Foreign Assets Control (“OFAC”) within the US Department of Treasury, the Bureau of Industry and Security within the Department of Commerce, and the FBI as structured to include Intelligence and Security Services.
That said, what are the primary statutes these agencies utilize to prosecute trade fraud?
One of the primary statutes used is the International Economic Emergency Powers Act, or “IEEPA.”
The Trading with the Enemy Act is one of the older criminal enforcement statutes on the books.
These statutes allow the Federal government to bring criminal charges against foreign nationals and domestics, as well as citizens who have engaged in statutory violations.
There are other more arcane statutes available as well, such as the Buy American Act. This Act focuses on ensuring that the US government is protecting major companies and that we are not importing things without protecting our key industries.
The Trade Agreements Act of 1979 is another arcane statute.
Likewise, we have also the old workhorses that Federal prosecutors have come to know and love in criminal prosecutions: the statutes prohibiting mail fraud, wire fraud, and conspiracy.
Essentially, if a malicious party devises a scheme to defraud and uses the instrumentality of the United States—namely, the US Post Office—to do it, it is a crime and a felony.
Wire fraud is somewhat adjunct in that a criminal prosecution must prove that a party created a scheme to defraud that utilized the wires. That is, it utilized, at this point in time, the telephone system or emails, among other things.
Conspiracy is a conceptually easy statute that simply requires that two or more parties get together to do something that the law forbids. It is a statute that is very frequently used in attacks on drug trafficking and organized crime money laundering as it allows the government to attach funds for forfeiture.
Further, the Foreign Corrupt Practices Act, the Arms Control Act, and the Aggravated Identity Theft Act have increased in importance given the frequency of computer hacking and identity theft that Federal prosecutors are now faced with.
The crime of unlawfully obtaining a computer system can likewise be prosecuted under a number of statutes.
The civil False Claims Act is a critical statute that allows private, vicarious prosecution on behalf of government agencies that have been defrauded.
In short, the Federal government is well-armed to combat trade fraud and related activities.
Joe Whitley of Baker Donelson, Chair of the Mackrell International (MI) White Collar Practice Group moderated a discussion with Michael E. Clark, Alan Enslen, and Aldo M. Leiva in the MI webinar titled “Evolving Foreign Trade Risks”. You can view the entire session on our YouTube Channel