In the new year, the U.S. Department of Justice’s corporate enforcement and investigative efforts will focus on customs and trade enforcement, immigration, and export controls. In light of this focus and recent DOJ activity, board members and in-house legal and compliance professionals should pay particular attention to the shipment of goods to and from East Asia, certifications made in connection with government contracts or grant or loan programs, and operations in Latin America. For energy and technology companies, we expect three areas to be of particular relevance to compliance efforts: 

I. Continued Use of the False Claims Act for Administration Priorities

The DOJ made broad use of the civil False Claims Act (FCA) in 2025 and will continue to do so in 2026. The FCA imposes civil liability for obtaining money from, or avoiding payments to, the federal government through the making of false statements or certifications.  The civil FCA does not provide for jail time, but the monetary penalties can be quite high because the government is allowed to collect treble damages for each false claim. FCA cases can be brought either by the DOJ directly or by a private citizen, known as a “qui tam relator,” who stands in the shoes of the government, unless and until the government decides to intervene in the case.

While, historically, the majority of FCA cases have involved alleged health-care fraud, the DOJ under the Trump administration has used the statute broadly to target administration priorities like customs and trade enforcement; immigration; diversity, equity, and inclusion (DEI); and cybersecurity.

Customs and Trade-Related Enforcement. On December 18, for example, DOJ announced that Ceratizit USA, a North Carolina–based distributor of tungsten carbide products, had agreed to pay $54.4 million to resolve customs and trade-related FCA allegations, originally brought in a qui tam lawsuit in the Eastern District of Michigan.¹ The settlement was reportedly the largest ever settlement of a custom-duties evasion case.

While the monetary amount of the settlement may have been unprecedented, the factual theories of liability have become fairly common in customs-related FCA cases. Specifically, Ceratzit allegedly (i) misrepresented the country of origin on goods imported into the U.S. (declaring goods as originating in Taiwan instead of China); (ii) transshipped Chinese manufactured goods through Taiwan to conceal their true origin; (iii) misclassified products under the Harmonized Tariff Schedule to reduce duties owed; and (iv) failed to properly mark goods with country of origin information. We expect to see more of such cases and investigations in 2026. 

Immigration. DOJ used the False Claims Act in the immigration context as well. On September 9, the Department announced a settlement with a New Jersey-based company, Bayonne Drydock, that worked on U.S. Navy ships, for “its continued employment of unauthorized alien employees in violation of the Employment Eligibility clause (‘E-Verify’) of the Federal Acquisition regulations.”₂  As part of the resolution, the Company agreed to pay a four million dollar fine.

Anti-DEI initiatives. Previously, in May 2025, DOJ announced the start of the “Civil Rights Fraud Initiative,” which DOJ said, will “utilize the False Claims Act to investigate and, as appropriate, pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws.”³ The Department’s press release announcing the initiative also “strongly encourage[d] anyone with knowledge of discrimination by federal funding recipients to consider filing a qui tam action under the False Claims Act.”

On December 28, the Wall Street Journal reported that the Trump administration has launched civil FCA investigations into DEI programs at major U.S. companies.⁴ The article reported that DOJ’s theory in these investigations is that companies holding federal contracts may be violating the FCA if they continue to consider diversity factors in hiring or promotion. Presumably, the relevant contracts require the company to make some kind of certification that it is in compliance with federal civil rights law, and DOJ’s FCA theory would be that the certification is false if the company is engaging in certain DEI practices. We expect to see these and similar investigations continue in 2026 and potentially beyond.

Cyber. DOJ also continued to use the FCA as a means to enforce cybersecurity requirements for federal contractors.  On July 31, DOJ announced that Illumina Inc. agreed to pay $9.8 million to resolve alleged violations of the FCA related to cybersecurity deficiencies in genomic sequencing systems sold to federal agencies.⁵ The government alleged the company sold genomic sequencing systems to government customers without an adequate cybersecurity program in place, including by failing to incorporate product cybersecurity into software design, development, installation, and post-market monitoring; failing to timely correct known software vulnerabilities in its products; and misrepresenting compliance with recognized cybersecurity standards, including those issued by the International Organization for Standardization (ISO) and the National Institute of Standards and Technology (NIST).

Potential Headwinds. A significant potential headwind for FCA activity is that, despite being enacted over 100 years ago, the qui tam provision, which allows a private plaintiff to bring an FCA case on behalf of the government, has come under recent judicial scrutiny. In October 2024, in Zafirov v. Florida Medical Associates, LLC, a federal district court in the Middle District of Florida held that the qui tam provision was unconstitutional because it violated the Appointments Clause of the Constitution. That decision was appealed to the 11th Circuit, and oral argument was held in December 2025. A decision should issue some time in 2026. In 2026, the Third Circuit will also hear oral argument in another FCA case involving a challenge to the qui tam provision, United States ex rel. Penelow v. Janssen Products, L.P..

However, even if these cases hold the qui tam provision unconstitutional, the Department of Justice would still have the ability to launch FCA investigations and bring FCA cases, albeit without the (often significant) help of the plaintiffs’ bar. 

II. More Criminal Investigations of Trade and Export Control Practices and Prosecutions Relating to Sensitive Technology 

DOJ also continued to bring criminal actions alleging the illegal export of sensitive technology to other countries, in particular China. For example, on November 19, 2025, DOJ announced it had charged four individuals with conspiring to export advanced graphics processing units (GPUs) with artificial intelligence applications to China.⁶  As alleged, the defendants agreed to purchase the GPUs, which were subject to Commerce Department licensing requirements; transshipped them through Malaysia and Thailand to conceal their ultimate destination in China; and falsified export paperwork to create sham contracts and fake end-users and destinations. 

Similarly, in August, DOJ announced that two individuals had been charged in the Central District of California with exporting GPUs to China.⁷ In that case, the government alleged defendants routed shipments through Singapore and Malaysia to conceal their ultimate destination and received payments from entities based in China and Hong Kong, rather than the listed recipients.

III. The FCPA Lives On 

In early 2025, DOJ announced that it was “pausing” enforcement of the Foreign Corrupt Practices Act (FCPA), and in June 2025, announced a new FCPA policy, in which the DOJ would prioritize investigations involving alleged misconduct (i) tied to drug cartels or other transnational criminal organizations; (ii) that deprived U.S. entities of fair access to compete and/or resulted in economic injury to Americans; or (iii) involved critical infrastructure or other assets tied to national security.⁸

Following the publication of the new policy, the number of FCPA actions remained below historic levels. However, the actions DOJ did announce emphasized these new priorities on bribery that injured U.S. businesses, impacted critical infrastructure, and/or occurred in Latin America. 

For example, in August 2025, DOJ filed FCPA bribery charges in the Southern District of Texas against two businessmen, who were alleged to have bribed Mexican officials to obtain business from a Mexican state-owned enterprise and one of its  subsidiaries.⁹ While one of the businessmen remained a fugitive, the other proceeded quickly to trial and was convicted by a jury in Houston federal court in December 2025. 

In November, the Department also announced that Comunicaciones Celulares S.A., doing business as TIGO Guatemala, agreed to pay over $118 million as part of a deferred prosecution agreement (DPA) to resolve an FCPA investigation.¹⁰ DOJ alleged that, between 2012 and 2018, company officials had made bribe payments to Guatemalan congressmen in exchange for legislative and political support benefiting TIGO Guatemala and used laundered narcotics proceeds to fund some bribe payments. 

Interestingly, in explaining its rationale for deferring prosecution, DOJ credited TIGO Guatemala’s parent corporation’s “voluntary and timely self disclosure” to DOJ of the bribery in 2015 but noted that TIGO Guatemala’s then controlling Guatemalan shareholder used operational control to block access to information, limit cooperation, and impede remediation during the early phase of the investigation.

IV. Takeaways

• Companies should expect sustained DOJ scrutiny of both inbound and outbound China related trade activity, including third country transshipment schemes. As noted above, in the second half of 2025, DOJ targeted efforts to use third countries—including Thailand, Malaysia, and Singapore—to disguise the shipment of goods both into and out of China. Energy and technology companies with global supply chains should pay appropriate attention to country of origin determinations, routing practices, and distributor oversight with particular care where China is (or may be) the ultimate source or destination.  They should maximize visibility into their supply chains, self-audit on a regular basis to verify the information they submit to the U.S. government about their supply chains and, where appropriate, seek independent, third-party verification.
• Customs and trade enforcement under the False Claims Act is likely to accelerate notwithstanding constitutional challenges to qui tam actions. Regardless of the outcome of these cases, DOJ’s own enforcement authority will remain intact. The $54.4 million Ceratizit customs related settlement is likely to further incentivize the plaintiffs’ bar to pursue FCA cases, particularly those involving alleged duty evasion, misclassification, undervaluation, and transshipment of China origin goods. 
• DOJ is using the FCA to advance broader policy priorities, including immigration, anti-DEI, and cybersecurity compliance for government contractors. The White House’s January 8, 2026 announcement that DOJ would be creating a “new division for national fraud enforcement,” to “enforce the Federal criminal and civil laws against fraud targeting Federal government programs, Federally funded benefits, businesses, nonprofits, and private citizens nationwide,” emphasizes the scrutiny that is being placed on the alleged fraudulent receipt of government funds.¹¹ Energy and technology companies doing business with the federal government should ensure that certifications and policies remain aligned with on-the-ground operational practices.
• FCPA enforcement remains selective but real, with Latin America continuing to present elevated risk. In addition, DOJ’s emphasis on the FCPA as a means of promoting fair competition for U.S. companies may provide U.S. companies will an additional avenue of potential recourse if they believe they have been shut out of a foreign government contract because of bribery by a competitor. 
• Companies should review, and if necessary, strengthen their internal reporting and escalation mechanisms. In particular, compliance programs should ensure that employees have a clear, accessible, and credible path to raise concerns internally, and that reports involving trade controls, China related routing, and third party conduct are promptly investigated and remediated.
• Events in Venezuela will continue to play out. DOJ’s recent focus on trade-related investigations and prosecutions and the revised FCPA policy suggest DOJ will, separate and apart from the actual prosecution of Nicolas Maduro, have an important role to play in shaping and implementing U.S. policy in that country. 

---

¹See Press Release, Ceratizit USA LLC Agrees to Pay $54.4M to Settle False Claims Act Allegations Relating to Evaded Customs Duties, available at https://www.justice.gov/opa/pr/ceratizit-usa-llc-agrees-pay-544m-settle-false-claims-act-allegations-relating-evaded-0.
²Government Contractor to Pay Over $4 Million to Settle False Claims Act Allegations, Sept. 18, 2025, available at https://www.justice.gov/usao-nj/pr/government-contractor-pay-over-4-million-settle-false-claims-act-allegations. 
³Press Release, Justice Department Establishes Civil Rights Fraud Initiative, available at https://www.justice.gov/opa/pr/justice-department-establishes-civil-rights-fraud-initiative.
⁴Lydia Wheeler, Justice Department Using Fraud Law to Target Companies on DEI, The Wall. St. Journal, Dec. 28, 2025. 
⁵Illumina Inc. to Pay $9.8M to Resolve False Claims Act Allegations Arising from Cybersecurity Vulnerabilities in Genomic Sequencing Systems, Available at https://www.justice.gov/opa/pr/illumina-inc-pay-98m-resolve-false-claims-act-allegations-arising-cybersecurity.
⁶See Press Release, U.S. Citizens and Chinese Nationals Arrested for Exporting Artificial Intelligence Technology to China, available at https://www.justice.gov/opa/pr/us-citizens-and-chinese-nationals-arrested-exporting-artificial-intelligence-technology.
⁷See Press Release, Two Chinese Nationals Arrested on Complaint Alleging they Illegally Shipped to China Sensitive Microchips Used in AI Application, available at https://www.justice.gov/opa/pr/two-chinese-nationals-arrested-complaint-alleging-they-illegally-shipped-china-sensitive.
⁸Our prior client alerts on both the FCPA “pause” and the new FCPA enforcement policy can be found here: https://www.bakerbotts.com/thought-leadership/publications/2025/february/yes-bribes-are-still-illegal-and-other-takeaways-from-the-fcpa-pause and here https://www.bakerbotts.com/thought-leadership/publications/2025/june/back-from-the-dead-takeaways-from-us-dojs-new-guidelines-for-fcpa-investigations-and-enforcement.
⁹See Indictment, United States v. Rovirosa, et ano., No. 4:25 cr. 415 (S.D. Tex.).
¹⁰Press Release, TIGO Guatemala Paid Over $118M To Resolve Foreign Bribery Investigation, available at https://www.justice.gov/opa/pr/tigo-guatemala-paid-over-118m-resolve-foreign-bribery-investigation.
¹¹See Fact Sheet, Fact Sheet: President Donald J. Trump Establishes New Department of Justice Division for National Fraud Enforcement, Jan. 8, 2026, available at https://www.whitehouse.gov/fact-sheets/2026/01/fact-sheet-president-donald-j-trump-establishes-new-department-of-justice-division-for-national-fraud-enforcement/.

ABOUT BAKER BOTTS L.L.P.
Baker Botts is an international law firm whose lawyers practice throughout a network of offices around the globe. Based on our experience and knowledge of our clients' industries, we are recognized as a leading firm in the energy, technology and life sciences sectors. Since 1840, we have provided creative and effective legal solutions for our clients while demonstrating an unrelenting commitment to excellence. For more information, please visit bakerbotts.com.