Corruption Crime & Compliance

If you think your company can smuggle and fly under the radar screen, think again.

When your company touches imports, customs, or tariffs, you need to know this.

The Justice Department stood up a dedicated trade fraud task force in August of last year. Its first settlement came three months later.

This past May, it delivered the largest customs-related False Claims Act recovery ever: $550 million from aluminum companies and their warehouses.

A week later, two steel companies paid $19 million for misrepresenting Chinese, Indonesian, Italian, Turkish, and Vietnamese steel as Canadian or American-made.

Underpaying customs duties you legitimately owe is a reverse false claim, meaning it’s a False Claims Act case with triple damages and whistleblowers ready to report you.

As tariffs climb, so does the incentive to misdeclare country of origin, and DOJ now has a dedicated task force and a whistleblower bar ready and good at spotting those situations.

If trade compliance isn’t in your risk assessment right now, fix that immediately.

The Ethics and Compliance Q and A show is produced by One Stone Creative.

In this episode of Corruption, Crime and Compliance, Michael Volkov breaks down the State Department's $36 million settlement with BAE Systems, Inc. over more than 100 alleged violations of the International Traffic in Arms Regulations and Arms Export Control Act spanning 2019 through March 2025, including unlicensed technical data exports to China, Canada, the U.K., and Germany, unauthorized defense services in Italy, France, and Indonesia, and a shipping mix-up that sent a fully controlled engine component to Switzerland in place of a properly licensed part. Despite BAE self-disclosing the vast majority of violations and cooperating fully with DDTC's investigation, avoiding debarment as a result, Volkov highlights the agency's pointed finding that BAE's compliance program lacked the integration to translate earlier corrective actions into lasting fixes, with violations continuing to recur even after a 2021 internal audit prompted real remediation efforts. The episode walks through specific fact patterns showing how insufficient training, high compliance staff turnover, inadequate export management software, and reliance on junior personnel for high-risk judgment calls combined to produce a sprawling pattern of violations, and closes with practical lessons for any export-controlled company: build control warnings directly into operational systems, treat compliance staff turnover as an enterprise risk, route licensing judgment calls to genuinely experienced personnel, extend verification controls all the way to the shipping dock, and ensure remediation after an audit addresses root causes rather than just visible symptoms.

You think you can cheat the government? The False Claims Act says you’ll pay for it three times.

The 2026 False Claims Act mid-year numbers are out, and the story is clear. DOJ isn’t backing down. It’s leaning in.

DOJ is using the FCA (False Claims Act) to drive administration policy priorities. In the first half of this year alone, it notched first-ever settlements in four distinct areas: gender-related care, the Civil Rights Fraud Initiative targeting DEI practices in federal contracting, a Medicare Advantage settlement from the DOJ-HHS Working Group, and trade and customs fraud.

Four new enforcement lanes, all producing real settlements within a year of being announced. Expect sustained activity in all four.

There’s a data story too. Qui tam filings by whistleblowers are surging - nearly 1,300 in fiscal year 2025 - and by data miners, who are now filing more than 45% of whistleblower actions.

DOJ just launched a new initiative to engage with and vet those data miners’ methodology.

Don’t read a quieter news cycle as a quieter DOJ. The FCA is more active than ever, just pointed at new targets.

The Ethics and Compliance Q and A show is produced by One Stone Creative.

In this episode of Corruption, Crime and Compliance, Michael Volkov examines the compliance risks lurking in ordinary U.S.-Mexico cross-border trade, explaining how the plaza system allows cartels to function as a de facto taxing authority over certain border corridors, extracting piso payments from legitimate commercial shipments that pass through their territory, often through customs brokers and logistics providers who absorb and disguise the cost as routine fees. Drawing on The Scoular Company's FCPA resolution, in which bribes paid to Mexican officials to clear failed agricultural inspections were later found to have partly benefited a border cartel without the company's knowledge, Volkov explains how the government's designation of major cartels as Foreign Terrorist Organizations has activated material support liability under the Anti-Terrorism Act, exposing companies to cartel-related risk regardless of intent or awareness. He closes with a practical compliance roadmap: reclassifying customs brokers and logistics providers as high-risk third parties, sharpening due diligence beyond standard sanctions screening, testing the substance behind every recurring border-related payment, building and actually enforcing audit rights, giving compliance real visibility into operational payment data, and breaking down the silos between sanctions, anti-money laundering, and anti-corruption teams so that cartel-linked risk doesn't fall through the cracks between them.

When using AI in your internal investigation, make sure you protect the attorney-client privilege.

A lot of investigators are feeding interview notes, documents, even witness statements into AI tools to help organize an investigation.

That’s convenient, for sure, but ask yourself: where does that data go? Is that platform actually covered by your privilege log? Did outside counsel direct that use, or did an investigator just start using a public AI tool because it was faster?

You wouldn’t just hand out your interview notes to third parties who are not under privilege. That’s what AI can do, unbeknownst to you.

If the answer is unclear, you may have just created a discoverable record that sits outside the protection of attorney-client privilege or work product doctrine.

Opposing counsel or a regulator can ask what tools you used, what prompts you entered, and what the AI generated.

If that trail wasn’t properly walled off under privileged attorney-client use, you may have to produce it.

And there’s a second failure mode: shadow AI. Investigators using unapproved tools on their own, without telling anyone, to save time.

You won’t find out until it surfaces in a document request.

My advice: before your next investigation starts, define exactly which AI tools are approved, who directs their use, and how that use is documented and protected.

Get ahead of it, because opposing counsel is already asking the question.

The Ethics and Compliance Q and A show is produced by One Stone Creative.

In this episode of Corruption, Crime and Compliance, Michael Volkov explains why forced labor compliance has shifted from a sustainability afterthought into a direct financial and operational threat. He walks through the U.S. Trade Representative's new two-tier Section 301 tariff structure targeting 60 trading partner economies over forced labor practices, the rebuttable presumption under the Uyghur Forced Labor Prevention Act that can freeze finished goods at the border over a single noncompliant sub-tier component, illustrated by a real case where thousands of finished luxury vehicles were impounded because of one blacklisted electronic part, and the EU's forthcoming forced labor regulation, which will allow European authorities to block imports, pull products from shelves, and order their disposal starting in late 2027. Volkov argues that these overlapping pressures require companies to abandon simplistic, country-based risk scoring in favor of a residual-risk approach that accounts for how mature and verifiable a supplier's actual labor controls are, and he outlines the specific warning signs of coercion, debt bondage, document confiscation, wage manipulation, forced overtime, and deceptive subcontracting, that a credible due diligence program must be trained to detect. The episode closes with a practical call to action: build an honest baseline of where supply chain risk is concentrated today and use it to prioritize a due diligence program capable of producing real evidence, not just policy documents, before regulators or customs officials come asking.

When you’re conducting an internal investigation and using AI as a tool, you’re risking the use of a shifty informant.

Let’s talk about a risk that I’m seeing firsthand in internal investigations: AI hallucination.

I use AI in my own practice, and I got scared very quickly because it cited cases that don’t exist. It cited them confidently, persuasively, like it was reading straight off a court docket. It wasn’t.

Now imagine that inside an internal investigation. You’re using an AI tool to summarise witness interviews, to search a document universe, to draft findings for audit committees.

If that tool fabricates a fact, misattributes a quote, or invents a document that was never produced and nobody catches it, that error doesn’t stay contained.

It becomes your investigative record. It becomes the basis for a disciplinary decision, a self-disclosure to a regulator, maybe even a certification to the government that your findings are accurate.

Here’s the rule I put in place today: every AI-assisted output in an investigation gets independently verified against the underlying source material.

Not spot-checked. Verified.

Because the day you rely on an AI summary you never checked is the day that your investigation’s credibility, and maybe your own, is on the line.

The Ethics and Compliance Q and A show is produced by One Stone Creative.

On the Corruption, Crime and Compliance podcast, host Mike interviews Severin Wirtz, an in-house compliance lawyer (now at a semiconductor company, formerly at Trace International and a law firm where he cut his teeth on the Bonny Island FCPA case) about his new book, Bribery Beyond Borders, a history of the Foreign Corrupt Practices Act that took him nearly fifteen years to research and write. Wirtz argues the FCPA is usually reduced to a footnote of Watergate, when in fact it emerged from decades of prior anti-bribery legal tradition, Cold War fears that corrupt American multinationals (like ITT in Chile) were undermining democracy and fueling Soviet propaganda, and a narrow, contingent political path through Congress — driven by figures like Senator Frank Church, SEC enforcement chief Stanley Sporkin (who leaked findings to Congress after being blocked by Kissinger's State Department), and later William Proxmire, with Ford and even Carter only lukewarm supporters until the "Watergate babies" swept into Congress. The conversation moves to today's landscape: the Trump administration's 2025 pause on FCPA enforcement, the DOJ's new "national interest" enforcement standard, debate over prosecuting foreign officials who receive bribes (Wirtz is wary of the precedent), the emerging cartel-linked corruption cases like the Mexican Vitol/Scolar-type matter, and Wirtz's view that the statute is at an "inflection point" moving from a post-Cold War globalist rationale toward a new argument centered on fair competition and America's geopolitical brand versus China. Both agree corruption concerns are cyclical and likely to resurface domestically before circling back to FCPA enforcement. The book is available through Corporate Compliance Insights (publisher) and major retailers.

If you’re looking at the Justice Department and only at FCPA cases, you’re looking in the wrong place.

Everyone’s talking about the DOJ going soft on corporate crime. I want to push back on that narrative because I think it’s incomplete and, honestly, a little dangerous if compliance officers believe it.

Yes, traditional FCPA and bribery prosecutions have slowed. But look at where the resources are actually going.

Trade enforcement is exploding. Sanctions enforcement is aggressive and getting more aggressive by the month.

And here’s the one that should really get your attention: the False Claims Act is now being used against companies for tariff circumvention and customs fraud, with qui tam relators and lawyers lining up to bring those cases.

This isn’t a retreat. It’s a reallocation.

DOJ has simply moved its firepower to where the current priorities sit: national security, trade, tariffs, sanctions, and export controls.

If your compliance program is still built around FCPA risk and you haven’t retooled for trade and sanctions exposure, you are exposed right now, today.

Update your risk assessment. This is not the moment to stand down.

The Ethics and Compliance Q and A show is produced by One Stone Creative.

In this episode of Corruption, Crime and Compliance, Michael Volkov sits down with Christian Focacci, founder of Threat Digital, for their annual check-in on AI's evolving role in due diligence and compliance. Focacci traces how AI adoption has matured from early hype and generic chatbot rollouts to more disciplined, use-case-specific tooling, while cautioning that the underlying models still hallucinate and should never be treated as an authoritative source rather than a reviewer of externally cited, verifiable information. The conversation covers the widespread problem of "shadow AI" use inside organizations without governance, the risks of letting AI creep into discretionary decision-making without human accountability, and emerging third-party risk questions as companies must now vet how vendors themselves are using AI. Volkov and Focacci also discuss the rapid rise of open-weight Chinese models, the regulatory patchwork forming at the state level (particularly around HR uses of AI), and the risk of regulatory capture favoring large AI incumbents over smaller innovators. The episode closes on a balanced note: AI is genuinely valuable for processing large data sets, triaging sanctions alerts, and boosting productivity, but only when paired with rigorous human oversight, clear documentation, and citations traceable back to verifiable source material.