On October 1, 2026, Assistant Attorney General for the National Fraud Enforcement Division (the “Fraud Division”) of the U.S. Department of Justice (“DOJ”) Colin M. McDonald issued “Directive 26-12: Corporate Enforcement in the Fight Against Fraud,” a memorandum outlining enhanced responsibilities for Fraud Division prosecutors and identifying priorities in prosecuting corporate fraud (the “Memorandum”) involving public funds. [1] The Memorandum also provides a non-exhaustive list of factors for Fraud Division prosecutors to consider in bringing charges in corporate fraud cases. The Fraud Division’s announcement is particularly relevant for companies in the health care sector, as well as all companies engaged in government contracting and cross-border trade.
Background: National Fraud Enforcement Division
The Fraud Division was established in April 2026 with the “core mission” to “zealously investigate and prosecute those who steal or fraudulently misuse taxpayer dollars.”[2] With this priority in mind, the Fraud Division has focused on combatting fraud in the areas of government procurement, healthcare, tax evasion, and trade.[3] The Fraud Division has absorbed various components of the Criminal Division, including the Tax Section, the Health Care Fraud Unit, and the Market, Government, and Consumer Fraud Unit, and subsumed the Criminal Division’s previous role in the Trade Fraud Task Force, along with the Department of Homeland Security. The Fraud Division currently consists of eighteen sections, employs approximately five hundred attorneys and staff, and is currently continuing to hire trial attorneys for nearly all of its prosecuting sections.[4]
Key Directives in the Memorandum
The Memorandum outlines the responsibilities of the Fraud Division’s Corporate Enforcement Section.[5] Specifically, the Memorandum instructs Fraud Division prosecutors in its prosecuting components to “work closely with the Corporate Enforcement Section at all phases of corporate investigations,” including by reporting “any ongoing corporate investigations” to the Chief of the Corporate Enforcement Section within seven days of the Memorandum’s issuance and on an ongoing basis as new cases arise.[6] The Memorandum also tasks the Corporate Enforcement Section with “primary responsibility” for evaluating company compliance with the terms of a corporate resolution, including by ensuring that the company has implemented a compliance program and has made adequate reports under its disclosure obligations.[7] The Memorandum explains that such a “division of labor” will “free up resources in the prosecuting sections to pursue additional individual and corporate cases and allow corporate enforcement experts to assess compliance with corporate resolutions consistently across the Division.”[8]
The Memorandum also highlights the Fraud Division’s focus on a data-driven approach and leveraging analytics and other tools for investigative purposes. The Memorandum touts the Fraud Division’s deployment of “an infusion of resources, state-of-the-art technology, and data analytics through its National Fraud Detection Center and partner components” to execute its enforcement priorities, reflecting the Fraud Division’s increased reliance on data to initiate and conduct investigations.[9]
Finally, the Memorandum directs Fraud Division leadership to implement policies that incentivize whistleblowers to bring forward relevant information pertaining to corporate fraud, although it does not address what incentives may be involved.[10] The Memorandum emphasizes the Department’s historical reliance on “honest brokers willing to come forward and share information with the government, even when they share culpability for the misconduct,” and it urges the Fraud Division to “encourage and protect” such information-sharing.[11]
The Memorandum further directs prosecutors in the Fraud Division who are “opening and conducting a corporate investigation” to focus their efforts on specific priorities that “appropriately and efficiently advanc[e] [the Fraud Division’s] corporate enforcement mission.”[12] The following misconduct “should” be prioritized: (1) “fraud schemes involving the health care industry,” such as health care fraud, schemes involving controlled substances, and violations of the Federal Food, Drug, and Cosmetic Act; (2) fraud schemes related to government contracts and other government functions that impact the “public trust or financial integrity of Americans and markets”; (3) tax evasion; and (4) fraud involving “tariff evasion, importation of goods or services, or forced labor.”[13] This list is similar to the priorities that have previously been outlined as particularly important to the Fraud Division.[14]
Factors for Consideration in Determining Outcomes of Corporate Fraud Investigations
The Memorandum outlines a non-exhaustive list of factors on which Fraud Division prosecutors “must place great weight” in determining whether to bring charges or negotiate plea or other agreements.[15] In a recent interview, Assistant Attorney General McDonald identified “[k]nowledge of or involvement in a fraud scheme by corporate management” as the “top line” among other factors.[16] Other considerations include:
- efforts to conceal the fraud from auditors and obstruct a government investigation;
- conduct lasting three years or more;
- actions that “threaten the safety or security of Americans, including military readiness”;
- conduct that causes financial hardship to a taxpayer-funded program or conduct that affects multiple taxpayer-funded programs;
- conduct that affects three federal districts or more;
- conduct that results in financial harm to 25 or more victims or $25 million or more in loss;
- conduct that involves the “exfiltration of American dollars to support foreign adversaries”; and
- conduct that involves immigration offenses.[17]
Although the Fraud Division has not previously detailed these factors, many of them resemble more general considerations for enforcement published by the DOJ,[18] which remain in effect for the entire Department.
Key Takeaways
- The Memorandum’s outline of Fraud Division priorities continues the DOJ’s focus on fraud perpetrated against the federal government in areas such as health care, government contracts, tax, and trade, and builds on the Department’s data-driven approach to investigating health care and trade-related fraud.
- Companies that receive government contracts, operate in the health care sector, or engage in sectors impacted by tariffs or import/export regulations should consider reviewing their compliance programs in light of the Fraud Division’s latest guidance.
- Companies also should assess their risk exposure in accordance with their involvement in priority areas, consider whether any pending investigations or negotiations may be potentially impacted, and review their internal reporting chains and whistleblower policies.
- Companies whose work has cross-border implications should be mindful that the Fraud Division has announced it will more closely scrutinize potential fraud with an immigration or national security nexus.
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[1] Memorandum from Colin M. McDonald, Assistant Att’y Gen., Nat’l Fraud Enf’t Div., U.S. Dep’t of Just., Directive 26-12: Corporate Enforcement in the Fight Against Fraud, U.S. Dep’t of Just. (Oct. 1, 2026) (“Memorandum”), available here.
[2] Memorandum from Todd Blanche, Acting Att’y Gen., U.S. Dep’t of Just., Creation of the National Fraud Enforcement Division, U.S. Dep’t of Just. (Apr. 7, 2026), at 1, available here.
[3] Memorandum from Colin M. McDonald, Assistant Att’y Gen., Nat’l Fraud Enf’t Div., U.S. Dep’t of Just., The Division’s Enforcement Priorities, U.S. Dep’t of Just. (Aug. 13, 2026), at 3, available here.
[4] Nat’l Fraud Enf’t Div., “Sections and Offices,” U.S. Dep't of Just., available here (last visited Oct. 6, 2026); Memorandum from Colin M. McDonald, Assistant Att’y Gen., Nat’l Fraud Enf’t Div., U.S. Dep’t of Just., The Division’s Enforcement Priorities, U.S. Dep’t of Just. (Aug. 13, 2026), at 2, available here.
[5] Memorandum, at 2-3.
[6] Memorandum, at 2-3.
[7] Memorandum, at 3.
[8] Memorandum, at 3.
[9] Memorandum, at 4.
[10] Memorandum, at 4-5.
[11] Memorandum, at 5.
[12] Memorandum, at 3.
[13] Memorandum, at 3-4. While the Memorandum does not apply to criminal antitrust matters involving 15 U.S.C. §§ 1-38, these points of emphasis are consistent with Antitrust Division criminal enforcement priorities focused on government contracts, healthcare, whistleblowers and data analytics.
[14] See Memorandum from Colin M. McDonald, Assistant Att’y Gen., Nat’l Fraud Enf’t Div., U.S. Dep’t of Just., The Division’s Enforcement Priorities, U.S. Dep’t of Just. (Aug. 13, 2026), at 3, available here (listing “(A) public trust and financial integrity, (B) health care, (C) internal revenue, (D) global trade and commerce, and (E) corporate misconduct” as priorities).
[15] Memorandum, at 4.
[16] Phillip Bantz, DOJ Outlines New Corporate Fraud Enforcement Priorities, Law360, Oct. 1, 2026, available here.
[17] Memorandum, at 4.
[18] See Principles of Federal Prosecution of Business Organizations (JM 9-28.300) (listing factors such as the corporation’s complicity in wrongdoing, willingness to cooperate, and risk of harm to the public as issues for prosecutors to consider when making charging decisions).
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