DOJ’s New Fraud Division Issues Corporate Enforcement Directive

On October 1, 2026, Colin M. McDonald, Assistant Attorney General for the Justice Department’s National Fraud Enforcement Division (the “Fraud Division”), issued Directive 26-12: Corporate Enforcement in the Fight Against Fraud (the “Directive”), which sets out the Division’s corporate enforcement principles, investigation priorities and key factors to be considered in charging and resolution decisions. The Directive also marks a significant step in defining the Division’s internal structure, including the role and responsibilities of its Corporate Enforcement Section.

President Donald J. Trump announced creation of the Fraud Division earlier this year, assigning it a broad mandate to “enforce the Federal criminal and civil laws against fraud targeting Federal government programs, federally funded benefits, businesses, nonprofits and private citizens nationwide.” The Directive explains how the Division will fulfill this mandate by holding corporate offenders accountable. Key takeaways include:

• Enforcement principles. Corporate enforcement is a necessary component of the Division’s “aggressive, all-tools” approach to investigating and prosecuting fraud. At the same time, the Division will credit companies that disclose misconduct, cooperate and remediate, and it will guard against “overbroad” corporate enforcement.
• Corporate enforcement priorities. Prosecutors are directed to prioritize corporate investigations involving fraud related to (1) health care; (2) public trust, procurement and government contracts; (3) significant evasion of internal or external revenue; and (4) tariff evasion, importation of goods or services, or forced labor.
• Key charging and resolution factors. When recommending appropriate outcomes in corporate matters, prosecutors must give “great weight” to a non-exhaustive list of ten factors, including management knowledge, concealment, the duration of the fraud scheme and financial harm.
• The Corporate Enforcement Section. A new Corporate Enforcement Section will lead the Division’s work to ensure the consistent, fair and successful prosecution of corporate crime. Division prosecutors must report corporate investigations to the Section to ensure proper resourcing and compliance with Department policies. The Corporate Enforcement Section will also have primary responsibility for evaluating compliance with the terms of corporate criminal resolutions.
• Data analytics and whistleblower incentives. Division leadership is directed to design policies that incentivize whistleblowers, including those who participated in criminal conduct, to come forward.
• Consistency with other Department policies and priorities. The Directive explicitly requires prosecutors to follow other Department policies, including the Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP) (see our prior alert here). The Directive’s principles and priorities, including an emphasis on self-disclosure, are also consistent with recent remarks from Tysen Duva, Assistant Attorney General for the Criminal Division.

Principles of Corporate Enforcement

The Directive makes clear that the Fraud Division will take an “aggressive, all-tools” approach to investigating and prosecuting fraud, and that corporate enforcement is a “necessary component” in this effort. In particular, the prosecution of corporate offenders “holds criminal entities accountable, furthers individual prosecutions, promotes a culture of compliance and integrity, and protects and fosters honest and good-faith markets and institutions.”

However, the Directive also highlights the need to “protect law-abiding companies and appropriately credit those that demonstrate a willingness to disclose misconduct, cooperate and remediate.” Accordingly, the Directive describes a “finely tuned” corporate enforcement program, which will aggressively target corporate bad actors, while guarding against “overbroad corporate enforcement” by distinguishing between “shades of corporate malfeasance.” In practice, this enforcement principle may translate into a focus on prosecuting cases that involve evidence of corporate management’s knowledge of, or involvement in, fraud schemes (see below). The Directive also makes clear that prosecutors must follow Department-wide policies concerning corporate enforcement, including the CEP and Principles of Federal Prosecution of Business Organizations.

Corporate Investigation Priorities

The Directive instructs prosecutors to prioritize four categories of fraud when opening and conducting corporate investigations:

1. Health care industry fraud, including distribution of controlled substances and violations of the Federal Food, Drug and Cosmetic Act (FDCA).
2. Public trust and government fraud, including fraud schemes involving the public trust or financial integrity of Americans and markets related to procurement, government contracts and other government functions.
3. Revenue evasion, including fraud schemes involving significant evasion of internal or external revenue.
4. Trade and tariff fraud, including fraud schemes involving tariff evasion, importation of goods or services or forced labor.

These corporate enforcement priorities generally align with the areas of responsibility of four previously announced Division sections: the Health Care Fraud Section, the Public Trust and Financial Integrity Section, the Tax Section and the Global Trade & Commerce Enforcement Section.

Key Factors for Charging and Resolution

The Directive identifies the following ten factors, which must receive “great weight” when prosecutors determine whether to bring charges and negotiate plea or other agreements in corporate matters.

1. Knowledge of or involvement in fraud scheme by corporate management.
2. Efforts to conceal fraud from government agencies or auditors or otherwise impede or obstruct a government function or oversight.
3. Conduct that furthers the scheme lasting three years or more.
4. Actions that threaten the safety or security of Americans, including military readiness.
5. Conduct that causes substantial financial hardship to a taxpayer funded program or government function.
6. Conduct that affects multiple taxpayer-funded programs or government functions.
7. Conduct that affects three federal districts or more.
8. Conduct that results in financial harm to twenty-five or more victims or $25 million or more in loss.
9. Conduct that involves the exfiltration of American dollars to support foreign adversaries.
10. Conduct that involves immigration offenses.

These factors are expressly non-exhaustive and prosecutors may “consider any other relevant factor, consistent with the Justice Manual and place appropriate weight on such factor in deciding a course of action in a corporate case.”

Assistant Attorney General McDonald’s public remarks underscore the significance of the first factor, related to management knowledge and involvement. As he told Law360, “[k]nowledge of or involvement in a fraud scheme by corporate management is sort of the top line that we would look at, and then we have, down the line, included certain administration priorities that are important for us to tend well to, including if there is a fraud scheme that a corporation or corporate actor engages in that involves immigration offenses.”

Centralized Corporate Enforcement Section

The Directive describes the role and responsibilities of the Division’s Corporate Enforcement Section, including ensuring the consistent, fair and successful prosecution of corporate crime.

• Seven-day reporting. Within seven days of the Directive’s issuance, all Division prosecutors must report any ongoing corporate investigations to the Chief of the Corporate Enforcement Section.
• Ongoing notification. Division prosecutors also must promptly notify the Corporate Enforcement Section of any new corporate investigations, as well as major developments in ongoing corporate cases; the Section will participate in matters as necessary to ensure adequate resources and compliance with Department policies.
• Primary responsibility for monitoring resolutions. The Corporate Enforcement Section will have primary responsibility for evaluating a company’s compliance with the terms of any corporate criminal resolution, including leading the Division’s work evaluating compliance program enhancements, ensuring adequate reporting under any disclosure obligations and responding to issues that arise during the term of the agreement.
• District Fraud Counsel carve-out. Attorneys assigned to the Division’s District Fraud Counsel Section are embedded within U.S. Attorney’s Offices, where they execute the Fraud Division’s mission. The Directive does not extend to cases assigned to a District Fraud Counsel by a U.S. Attorney’s Office that are not also supervised by the Fraud Division. However, the Corporate Enforcement Section can serve the U.S. Attorney network on fraud matters where helpful to the Department's overall mission.

Data Analytics, Whistleblowers and Self-Disclosure

The Directive highlights two mutually reinforcing detection mechanisms to identify and investigate misconduct.

National Fraud Detection Center. The Fraud Division is “leveraging an infusion of resources, state-of-the-art technology and data analytics through the National Fraud Detection Center and partner components” to proactively generate leads and open new individual and corporate fraud investigations at a “rapid pace.” This capability underscores the that companies jeopardize potential voluntary self-disclosure and cooperation credit if DOJ becomes aware of misconduct and obtains evidence through other channels.

Whistleblower programs. Division leadership, in consultation with law enforcement partners, is directed to “design and implement policies and programs that appropriately incentivize whistleblowers to bring forward credible information pertaining to fraud and provide the public with transparency to the extent possible regarding those policies and programs.” Notably, the Division’s whistleblower policies must “encourage and protect the disclosure of information by whistleblowers, including by those who participated in the criminal conduct,” signaling that incentives may be made available even to culpable actors who bring forward credible information pertaining to fraud.

CEP and voluntary self-disclosure. As discussed in our prior alert, the Department-wide CEP provides significant incentives, including a presumption of declination, for qualifying companies that voluntarily disclose misconduct, cooperate and remediate. These benefits may be lost or diminished if the Division learns of misconduct through the detection mechanisms described above. Therefore, companies should carefully consider disclosure to DOJ at an early stage, before completion of a comprehensive internal investigation.

Consistency with Criminal Division Priorities

On September 30, Tysen Duva, Assistant Attorney General for the Criminal Division, spoke at a GIR Live event, where his comments pointed to corporate enforcement principles and priorities that are broadly similar to those described in the Fraud Division Directive. In particular, Duva stressed the benefits of self-reporting. Duva also remarked that companies should seek to self-disclose violations early on and “get in the room” with prosecutors to build a constructive relationship. In addition, similar to the Fraud Division’s “finely tuned” approach, Duva noted that the Criminal Division’s goal is not to “ruin a company” or see them struggle, but rather to “remove the bad apples.”

Duva also commented on the allocation of responsibilities between the Criminal Division and the Fraud Division, explaining that if the government was harmed by the loss or the intended loss, the case will be handled by the Fraud Division, while other cases will still be handled by the Criminal Division.

With respect to Foreign Corrupt Practices Act (FCPA) cases handled by a specialized unit of the Criminal Division’s White-Collar and Corporate Enforcement Section, Duva indicated that enforcement is “really ramping up,” along with an increase in staffing, with large corporate resolutions expected in the coming six months.

Key Takeaways

• Assess sector-specific exposure. Companies in the health care industry, government contractors, federal funds recipients and importers face the risk of increased scrutiny under the Directive.
• Map risk against key factors. Companies should evaluate whether identified compliance issues may implicate factors such as management knowledge, concealment from government agencies, conduct spanning three or more years, impacts to government functions or taxpayer-funded programs, or financial harm exceeding $25 million, which may increase the risk of prosecution.
• Consider the risk of non-disclosure. The Division’s focus on improved data analytics and whistleblower incentives generally increases the risk that DOJ may learn of a company’s misconduct, even if it is not self-disclosed.
• Review internal controls and compliance programs. Companies should review their compliance programs, including policies and procedures, internal reporting and escalation procedures, data analytics and other compliance tools to ensure they are designed to effectively detect and prevent the categories of misconduct that the Division has identified as enforcement priorities.