Through a flurry of recent announcements and new directives, the U.S. Department of Justice’s new National Fraud Enforcement Division (the “Fraud Division”) is making clear its intention to aggressively pursue and prosecute fraud using new and expanded tools and a strategic deployment of Department resources. The Fraud Division has also identified specific priorities where it plans to focus these tools and resources including, fraudulent schemes relating to health care, government contracts, and international trade. This update provides key insight into the Fraud Division’s approach as it relates to corporate fraud and is a necessary review for any company involved in government contracts, international trade, or the health care industry.

DOJ Outlines Its Fraud Priorities and Strategy

In less than a year since being formed, the Fraud Division has announced dozens of government fraud enforcement actions driven by a division with newly defined policies and objectives. Its most recent announcement and directives provide further insights into potential changes in the enforcement landscape.

On October 1, 2026, the Fraud Division issued a memorandum and directive to Fraud Division prosecutors identifying its corporate enforcement priorities and procedures to “take an aggressive, all-tools approach to investigating and prosecuting our health care, government, tax, and trade fraud priorities.” (the “October 1st Directive”). The October 1st Directive further outlined Department priorities—expanding on a prior August 2026 memorandum—including a focus on “health care fraud,” schemes “related to procurement, government contracts, and other government functions,” and “tariff evasion” and “importation of goods or services.”  The Directive further explained that when deciding whether to open a corporate fraud investigation and recommending appropriate outcomes in such matters, Fraud Division prosecutors should place “great weight” on specific factors of note for government contractors and companies involved with government programs, including:

  • “Knowledge of or involvement in the fraud scheme by corporate management;”
  • “Efforts to conceal fraud from government agencies or auditors or otherwise impede or obstruct a government function or oversight;”
  • “Actions that threaten the safety or security of Americans, including military readiness;”
  • “Conduct that causes substantial financial hardship to a taxpayer funded program or government function” or “affects multiple taxpayer-funded programs or government functions;” and
  • “Conduct that involves the exfiltration of American dollars to support foreign adversaries.”

The October 1st Directive also centralizes DOJ’s corporate investigations into the Fraud Division and requires that the Chief of the Corporate Enforcement Section (“CES”) be notified of all ongoing or new corporate investigations and any major case developments and be responsible for monitoring compliance with corporate resolutions. Finally, the October 1st Directive outlines the Fraud Division’s use of “state-of-the-art technology” and “data analytics” through the National Fraud Detection Center to proactively generate leads and open new cases at a rapid pace. Now, prosecutors will be able to rely upon and employ a variety of tools in support of their enforcement actions.

Less than a week after the October 1st Directive, on October 7, 2026, the Fraud Division issued an additional directive to “[a]ttack fraud from all angles” including an expanded use of enforcement tools like “asset seizures and injunctions,” and “developing proactive cooperators.”  (the “October 7th Directive”).  The October 7th Directive elaborates on the expanding toolset, noting that the Fraud Division will increase its use of tax, securities, and consumer protection statutes to pursue charges past the underlying fraud offenses. The October 7th Directive also instructs prosecutors to pursue asset seizures and court injunctions, placing a priority on the early seizure of fraud proceeds. The October 7th Directive prioritizes utilizing warrants, forfeiture proceedings, and civil actions to recover assets held in banks and cryptocurrency exchanges and wallets, website domains and online accounts, and other digital assets.  With respect to data analytics, the October 7th Directive explains that such capabilities will be used to develop an “unprecedented intelligence function” that can correlate federal program, contract, and funding data against market activity, which can be leveraged by the Division and prosecutors in future enforcement actions.

Demonstrating its intention to deploy these expanded tools, on October 20th, the Fraud Division announced a new whistleblower incentive program that will offer up-front financial awards between $10,000 to $30,000 to tipsters that who provide information that leads to certain criminal charges.  Unlike other whistleblower programs, which typically issue awards only after final resolution of a criminal matter, which includes the potentially lengthy forfeiture and appeals processes, the “Fraud Whistleblower Incentive Program” (“FWIP”) will reportedly allow for payments earlier in the criminal process and will allow for additional larger rewards if a tip leads to large financial penalties or forfeiture.  The creation of the FWIP further emphasizes the DOJ’s more aggressive pursuit of government fraud and willingness to employ new methods of enforcement.

The possibility of financial compensation can be expected to motivate potential whistleblowers to disclose wrongdoing and could prompt a large influx of new investigative matters.  However, the efficacy of this approach, including whether the FWIP will have adequate resources and procedures in place to filter out faulty tips at an earlier stage of prosecution, remains to be seen.  But even if the tips do not yield a larger volume of viable prosecutions, the DOJ is sending the clear message through funding the program that it is committed to an aggressive enforcement posture toward fraud on the government and government programs.

These new developments come as the Fraud Division continues to expand its presence through increased hiring and the absorption of several other sections of DOJ.  The increase in resources and personnel, combined with the Fraud Division’s continued cooperation with whistleblowers, signals a continued uptick in corporate fraud investigations.

Takeaways

These recent developments shine light on how the Fraud Division will evaluate and pursue corporate fraud cases, with a particular focus on individuals who were involved in, knowledgeable about, or concealed long-running schemes that harm American taxpayers. They also reveal an increased focus on corporations that are involved in government contracts, procurement, and the importation of goods. As international trade and government contracting continue to be the focus of national security efforts, companies doing business in these spheres should expect to be under the microscope.  Therefore, it is important for companies engaged in these services to understand the complexities of the contracting and trade regulations in which they are operating and pressure-test their compliance programs to ensure they are ready for this enforcement environment.

As the Fraud Division continues to define and expand its enforcement efforts, companies should be cognizant of the following:

  1. The importance of effective, risk-based compliance programs: Carefully crafted and implemented policies and procedures remain the best mechanism to deter and address potential bad conduct. Unfortunately, seemingly robust but boilerplate compliance policies often fail to adequately mitigate the risks specific to a company’s business and/or fail to have adequate oversight from senior management.
  2. In addition to formal investigations, increased enforcement means companies may be the subject of subpoenas, asset forfeiture proceedings, and other requests for information: As the Fraud Division continues to define the scope of its enforcement powers, companies may receive subpoenas as part of these investigations. Such subpoenas may relate to the receipt of assets from individuals or companies who may have committed fraud.
  3. Investigating Indicia of Unlawful Conduct: Like robust compliance programs, internal investigations continue to serve as vital mechanisms to root out bad actors and demonstrate internal initiative to address potential fraud. Particularly as the Department seeks to further incentivize whistleblowers, companies should evaluate their mechanisms for internal reporting of misconduct and their process for proactively investigating any indicia of misconduct.

The Fraud Division’s recent announcements and directives signal heightened risks for government contractors and companies whose business activities otherwise involve health care, procurement, or international trade. Companies should evaluate whether they have risk-based compliance protocols tailored to their business that are sufficiently resourced and are well positioned to investigate, remediate, and, if necessary, proactively disclose information relating to potential misconduct to the Government. The attorneys in Fluet’s Litigation + Investigations and International Trade Practices regularly guide government contractors, importers, and corporations through complex DOJ compliance and enforcement matters. To evaluate risk exposure or conduct an internal review under these new directives, connect with our team.