March 25, 2025 — The U.S. Department of Justice (DOJ) has announced an $8.1 million settlement with Evolutions Flooring Inc., a California-based importer of multilayered wood flooring, and its owners, for violating the False Claims Act (FCA). The company was accused of knowingly evading millions in customs duties on imports from China, providing false information about the origin and manufacturing of its products.
This case underscores a critical truth for all businesses operating in regulated markets, and especially for federal contractors: compliance missteps aren’t just administrative errors—they’re legal liabilities with multimillion-dollar consequences.
The Allegations
According to the DOJ, between September 2019 and July 2022, Evolutions Flooring, under the direction of its owners, submitted false declarations to U.S. Customs and Border Protection (CBP). These included misrepresentations about:
- The country of origin
- The identity of manufacturers
- The applicability of antidumping, countervailing, and Section 301 duties
These duties are designed to level the playing field for U.S. manufacturers and prevent unfair trade practices. By misrepresenting this information, Evolutions allegedly avoided millions in import duties, gaining an unfair advantage over law-abiding competitors.
Why This Matters Under EO 14173
Although this case involves import fraud, the broader implications for federal contractors and grant recipients cannot be ignored, especially in light of Executive Order 14173.
Under EO 14173:
- Federal contractors are required to certify their compliance with nondiscrimination and equal opportunity obligations.
- Any false representation—intentional or negligent—can trigger False Claims Act liability.
- Violations may result in treble damages, debarment, reputational harm, and criminal investigation.
This means that a federal contractor who claims to be in compliance with nondiscrimination laws but fails to implement or enforce those policies could face the same level of liability as Evolutions did for customs fraud.
The penalty structure under the False Claims Act is no longer limited to traditional fraud. It now covers nondiscrimination and civil rights obligations under federal contracts and awards.
The FCA Is a Powerful Tool—And It’s Being Used More Often
The False Claims Act has become one of the most powerful enforcement tools in the federal government’s arsenal. The Evolutions case is a prime example of how the DOJ is working with agencies like CBP and the Department of Commerce to identify and prosecute fraud across sectors.
And it’s not just about penalties. In this case, a whistleblower (Urban Global LLC) brought the case forward and received over $1.2 million in a relator share. The whistleblower provision of the FCA has empowered insiders to come forward, making it even more critical for companies to ensure airtight compliance.
What Employers, Especially Federal Contractors—Should Do Now
For companies subject to EO 14173 and other federal mandates, this case is a clear warning. Compliance failures, whether related to trade, civil rights, or financial disclosures—can become False Claims Act cases overnight.
Now is the time to:
- Conduct a full compliance risk assessment
- Review and update nondiscrimination and equal opportunity policies
- Ensure accurate documentation and certification of all obligations
- Engage third-party experts for workforce analytics or compliance audits
- Train internal teams on whistleblower protections and reporting obligations
Final Thought
The $8.1 million settlement with Evolutions Flooring isn’t just about customs duties. It’s about accountability. It’s about the federal government’s growing willingness to use the False Claims Act to pursue companies that cut corners, misrepresent facts, or fail to uphold legal responsibilities.
Under EO 14173, this now includes civil rights and nondiscrimination compliance—and federal contractors should view this as a watershed moment.
The cost of noncompliance has never been higher.
The best protection? Accurate reporting. Proactive compliance. And a culture of integrity.
The enforcement of Executive Order 14173 is transforming compliance requirements for federal contractors. Join us on April 30, 2025, at 10:30 AM PST for an exclusive virtual roundtable led by government officials for clear, actionable guidance to navigate the evolving regulatory landscape confidently.
Have questions about what your organization should do next? Our compliance experts are here to help you adjust, prepare, and protect your organization under EO 14173.