What if the Company Self-Discloses Before Filing for a Whistleblower Award?

If you've discovered that your employer — or a competitor — has been evading customs duties, your first instinct might be to pick up the phone and call a lawyer. Unless experienced in customs duty cases, FCA whistleblower attorneys may not spend enough time explaining how eligibility for a False Claims Act award may be impacted if the company in question has already made a Tariff Act self-disclosure, or is in the process of doing so.

First-to-File Is Real — But It's Not the Only Clock Running

Most people who consult a False Claims Act attorney hear about the first-to-file rule early in the conversation. The rule is straightforward: if someone else files a qui tam lawsuit based on the same underlying fraud before you do, your case can be thrown out entirely. The first-to-file rule ensures that the United States will not be on the hook to pay more than award, and it also actively encourages potential whistleblowers to act quickly, when information can do the most good. As helpful as it is to the government, it also creates risks for would-be whistleblowers: if you file second, you could get nothing. This rule creates real urgency, and any experienced FCA attorney will take it seriously.

But FCA attorneys experienced in customs cases also know that first-to-file isn't the only race being run. In customs fraud cases especially, there is a second clock — one that can reduce or even eliminate your award not because another relator beat you to the courthouse, but because the defendant itself beat you there.

That clock is called voluntary self-disclosure.

What Is Voluntary Self-Disclosure?

When an importer discovers — or suspects — it has underpaid customs duties, it has the option to come forward to either the Department of Justice or U.S. Customs and Border Protection before the government comes knocking. This is called a voluntary self-disclosure (VSD). It isn't an admission of guilt in the criminal sense, and it isn't required. But it can substantially reduce the penalties a company faces.

Under the False Claims Act, the government typically pursues double or damages — two or three times the amount of duties evaded — plus per-claim penalties. When a defendant makes a timely, complete, and cooperative self-disclosure before an investigation has begun, the DOJ has discretion to reduce that multiplier. The July 2025 settlement with Global Plastics LLC and Marco Polo International is a prominent recent example: the companies' proactive disclosure to CBP and DOJ, combined with an internal investigation and remediation, was explicitly credited as a reason for the reduced resolution amount.

For a company facing a potential eight-figure customs fraud liability, a well-executed VSD can be worth tens of millions of dollars in reduced exposure. The incentive to disclose — and to disclose quickly — is powerful.

Does a Self-Disclosure Kill Your Award?

Not necessarily. But it can reduce it, and in some circumstances it can complicate your case significantly. Here's why.

First, self-disclosures are often incomplete. Companies disclosing customs violations have every incentive to scope the disclosure narrowly — to admit what they believe the government already knows or can easily find, while omitting conduct that remains hidden. A whistleblower with inside knowledge may know that the disclosed period understates the true duration of the scheme, that additional product lines were implicated, that sister companies engaged in the same conduct, or that the disclosed theory of fraud was only one of several operating simultaneously. Any of those additional facts can support a viable — and valuable — qui tam claim even after a self-disclosure. I have direct experience with this scenario.

Second, a self-disclosure does not always precede a qui tam filing chronologically. A defendant may learn that a former employee is consulting whistleblower attorneys and rush a disclosure to the government in an attempt to preempt the case and reduce damages. If your filing comes first, the self-disclosure that follows doesn't affect your rights. This is the strong incentive in customs FCA cases to file with a thorough but fast complaint.

Third, the government still needs relators even after a disclosure. Investigators rely on whistleblowers to help them understand the full scope of fraud, identify records, and navigate complex supply chains. A relator who provides substantial assistance — even in a case where a disclosure exists — has leverage to negotiate a meaningful share.

A note from our practice: We have represented relators in cases where the defendant had already made a self-disclosure to customs before our client ever contacted us. The disclosure was real — but it was also incomplete. The defendant had narrowed what it admitted to the government, leaving out product lines, time periods, and a related-party pricing scheme that formed the heart of our client's knowledge. We were still able to bring a successful case. The resolution was smaller than it would have been without the disclosure, but our client received a meaningful award of over $1M — and the full scope of the fraud was finally on the record.

Speed and Thoroughness Are in Tension, But Are Not Mutually Exclusive

Here is where we want to push back on a false choice that sometimes gets presented to potential relators.

Some attorneys will tell you that in FCA cases, speed is everything — file fast, sort out the details later. Others take the opposite approach: spend months building the most comprehensive complaint possible before filing anything. Those choices can sometimes be dictated by facts such as known first-to-file threats, or exceedingly complicated schemes that may not be attractive to the government at all if not presented exceptionally well.

An experienced attorney who can hit the ground running quickly does not necessarily need to choose between these extremes. A customs fraud attorney who understands how CBP enforcement works, how HTS classification disputes unfold, and how antidumping and countervailing duty regimes operate can move faster and more effectively than a generalist FCA attorney who needs to learn customs law on your dime. Speed and thoroughness are not a tradeoff when your attorney already knows the terrain.

What You Should Do Right Now

If you have information about customs duty evasion — undervaluation, misclassification, transshipment fraud, or any other scheme — here is what matters:

Act quickly. Every day that passes is a day a co-worker, a competitor, or the company's own compliance team may get there first.

Don't assume a prior disclosure ends your case. A partial or incomplete self-disclosure can still leave substantial room for a qui tam action with a meaningful award.

Work with an attorney who knows customs law. The difference between a generalist and a specialist isn't just speed — it's the ability to spot the full scope of fraud, understand which theories are strongest, and evaluate what a self-disclosure actually covered.

We evaluate every customs fraud matter confidentially and at no charge, and as quickly as we can. Personally, I have benefited from my many dozens of in-depth consultations for would-be customs cases, even though many of those consultations have not resulted in a filed case (either because of some insurmountable obstacle, or because we are able to help the whistleblower determine that the potential reward may not be worth it in the long run). I have benefited significantly from insiders’ perspectives gained in those consultations, which make me a faster and more effective attorney in this space. That means I’m always happy to thoroughly review facts with you, even if it’s unlikely you will want to file.