One Fraud Division, Many Enforcement Questions: What DOJ's National Fraud Enforcement Division Means for Companies

The US Department of Justice (DOJ or Department) published a final rule on August 18, 2026 (Final Rule) formalizing the National Fraud Enforcement Division (Fraud Division) established in April 2026. Companies in the health care, government contracting, trade, and tax sectors should take note and scrutinize their compliance programs accordingly. The Fraud Division has grown rapidly, already wielding data-driven investigative tools and interagency partnerships, and has signaled that it will reward companies that self-disclose and cooperate while aggressively pursuing those that do not.

The Final Rule

Under the Final Rule, the Fraud Division has jurisdiction over the following broad range of fraud-related matters. Companies should understand the scope of the Fraud Division's reach:

• Criminal fraud. Criminal fraud matters (other than antitrust cases involving conspiracy to defraud the United States by violation of the antitrust laws, handled by DOJ's Antitrust Division). This is a catch-all category that could encompass wire fraud, bank fraud, procurement fraud, and similar offenses.
• Tax fraud. All criminal proceedings arising under the internal revenue laws. This includes tax evasion, fraudulent returns, and abusive tax shelters.
• Trade fraud. Criminal proceedings relating to trade fraud matters, including the importation of goods; customs duties, tariffs, other external revenue; or foreign commerce. Companies involved in cross-border supply chains or customs brokerage should take particular note.
• Government program fraud. Criminal proceedings involving monies owed to or paid by the United States. This covers government contractors, grant recipients, and participants in any federally funded program.
• Health plan fraud. Criminal proceedings involving fraud or abuse with respect to health plans. 
• Health care fraud and controlled-substances schemes. Criminal proceedings related to health care fraud and controlled substances distribution and diversion schemes. This encompasses Medicare and Medicaid fraud, illegal kickbacks, and opioid diversion.

DOJ's Criminal Division will retain authority over criminal fraud cases except tax fraud and health plan fraud, which are exclusively assigned to the Fraud Division. The Criminal Division's previously exclusive authority over controlled substances cases has also been made non-exclusive, permitting the Fraud Division to bring such charges where authorized. Accordingly, the Fraud Division and the Criminal Division will have concurrent jurisdiction over most general criminal fraud and controlled-substances matters.

Critically, it may also prosecute any federal criminal provision charged alongside a fraud case in its core areas and, notably, may prosecute any criminal offenses uncovered during its investigations, even if those offenses fall outside its enumerated subject-matter categories. In practice, this means a fraud investigation that begins as a health care billing inquiry for example, could expand to encompass tax, money laundering, or other charges. The Division will coordinate enforcement efforts with federal, tribal, state, territorial, and local law enforcement partners. 

The Attorney General or Deputy Attorney General may also assign the Fraud Division any case or category of cases — notwithstanding any other DOJ organizational provision — and may acquire cases by agreement with other DOJ components. In connection with its proceedings, the Fraud Division also has authority to seek injunctions against fraud, obtain restitution, seize or forfeit property, and recover forfeitures, damages, or penalties.

The McDonald Memo: Enforcement Priorities and Corporate Compliance Implications

On August 13, 2026, Assistant Attorney General Colin M. McDonald issued the Fraud Division’s Enforcement Priorities Memorandum (McDonald Memo) setting forth the Fraud Division's enforcement priorities across five areas: (1) public trust and financial integrity, (2) health care, (3) internal revenue, (4) global trade and commerce, and (5) corporate misconduct. The memorandum frames the urgency of the Fraud Division's work by citing a Government Accountability Office estimate that the federal government loses between $233 billion and $521 billion annually to fraud.

Perhaps the most consequential for corporate clients, the McDonald Memo commits the Fraud Division to "holding accountable organizations that flaunt [sic] the law and rewarding those that voluntarily self-disclose, cooperate, and remediate." As we discussed in March, DOJ announced its first-ever Department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP), which operates as follows:

• Part I. Voluntary self-disclosure, full cooperation, and timely remediation are likely to result in a presumption of a declination (i.e., no prosecution), absent aggravating circumstances. This is the most favorable outcome available under the policy.
• Part II. If a company fully cooperates and timely and appropriately remediates but is ineligible for declination under Part I because its self-reporting did not qualify as a voluntary self-disclosure or it had aggravating factors that warranted a criminal resolution, a qualifying company will generally be provided a Non-Prosecution Agreement and receive significantly reduced financial penalties. 

Why It Matters

Until recently, DOJ's fraud enforcement was spread across multiple components, principally the Criminal Division, the Tax Division, and individual US Attorney's Offices. The Fraud Division consolidates these functions into a single litigating division with a centralized mandate, dedicated leadership, and substantial resources. The McDonald Memo states that the Fraud Division will reach approximately five hundred attorneys and staff by August 24, 2026, and has "an aggressive plan" to continue growing over the next two years.

For companies, this reorganization matters for three reasons:

• Broader and more flexible jurisdiction. The Fraud Division's authority spans criminal fraud, tax fraud, trade fraud, government-funds fraud, health-plan fraud, and health care/controlled-substances schemes. The Fraud Division can also take on additional cases by assignment or agreement with other DOJ components — and can prosecute any criminal offenses it uncovers during an investigation, even if those offenses fall outside its core mandate. A company that interacts with the Fraud Division on one matter could face exposure in others, and should be prepared for parallel or coordinated enforcement.
• A full enforcement toolkit. The Fraud Division wields a range of authorities, including injunctive relief, restitution, asset forfeiture, and civil penalties, giving prosecutors flexibility to pursue the remedy that best fits the conduct. 
• Data-driven detection. The McDonald Memo describes the Fraud Division as building "the most sophisticated, innovative, and data-driven white-collar law enforcement component in the world." Companies should expect that fraud detection will increasingly be driven by analytics, algorithmic screening, and large-scale data matching.

Practical Takeaways

Companies should take concrete steps now to address the risks highlighted by the creation of the Fraud Division and the priorities identified in the McDonald Memo:

1. Pressure-test your compliance program. The CEP rewards companies with effective compliance infrastructures. Companies should assess whether their compliance programs can realistically detect and escalate fraud risks before government investigators do, particularly in health care billing, government grant administration, customs and trade compliance, and tax reporting. Programs that exist on paper but lack genuine monitoring, testing, and accountability mechanisms will not satisfy the Division's expectations. 
2. Build a self-disclosure decision framework. The CEP's presumption of declination makes voluntary self-disclosure a powerful tool, but the decision to self-disclose requires rapid, informed judgment. Companies should establish clear internal protocols, before a crisis arises, for identifying potential misconduct, conducting a prompt preliminary assessment, preserving documents, and making a timely, informed disclosure decision. Delayed or incomplete disclosures may forfeit the benefits of the CEP framework. As we emphasized recently, efficiency is the primary thread connecting civil and criminal DOJ resolutions.
3. Prepare for multi-front investigations. The Fraud Division's interagency mandate and its authority to prosecute offenses uncovered during investigations mean that a company under review by an inspector general, a state attorney general, or a regulatory agency may face parallel or escalating federal enforcement. Additionally, the McDonald Memo and Final Rule do not address how parallel civil enforcement will proceed in matters that may implicate both criminal and civil liability, such as health care fraud, pandemic fraud, and government procurement fraud schemes. Companies should ensure that their internal investigation protocols account for this possibility, including coordinating privilege and document-preservation strategies across potential enforcement tracks. 
4. Stay ahead of the curve. The Fraud Division is still scaling up, with plans for continued growth over the next two years. Companies should monitor the Fraud Division's enforcement actions, public statements, and future guidance for signals about emerging priorities and evolving expectations. Early attention to the Fraud Division's trajectory will allow companies to adapt their compliance posture proactively rather than reactively.
    

Subscribe To Viewpoints