Department of Justice’s Fraud Division Issues Corporate Enforcement Directive

On October 1, 2026, Colin M. McDonald, the Assistant Attorney General for the Department of Justice’s National Fraud Enforcement Division (the “Fraud Division”), issued a memorandum announcing the Division’s corporate enforcement principles and priorities (the “Corporate Enforcement Memorandum”).

The memorandum emphasizes that the Fraud Division will “take an aggressive, all-tools approach to investigating and prosecuting our health care, government, tax, and trade fraud priorities.”[1] The memorandum pairs a commitment to “aggressively target these bad corporate actors” with a pledge to “firmly guard against overbroad corporate enforcement,” though it remains to be seen how the Division will seek to strike that balance.

Critically, the memorandum’s four priorities and the ten factors it elevates show where the Division will focus and how it is likely to resolve corporate cases. Below, we describe the memorandum’s priorities, factors, and structural aspects and offer recommendations for companies.

The Fraud Division’s Four Corporate Enforcement Priorities

Consistent with the Fraud Division’s August 2026 memorandum, which we discussed in a prior client alert, the Corporate Enforcement Memorandum prioritizes fraud relating to health care, government procurement and programs, tax, and trade fraud. The memorandum’s precise language shows that the Fraud Division is taking a broad view of its investigative purview:

• Health care. Fraud schemes involving “the health care industry, including health care fraud, distribution of controlled substances, and violations of the Federal Food, Drug, and Cosmetic Act” (“FDCA”). By reaching fraud schemes involving the health care industry, not only health care fraud, this mandate extends beyond traditional health care fraud targets—medical device and pharmaceutical manufacturers and health care providers and suppliers that develop, produce, market, and deliver health care services and items—to reach third parties that may be investing in health care or other health care-adjacent entities, from investors to payors to health technology and data platforms and others. Health care has been a continued area of focus for the current administration in both criminal and civil enforcement, evidenced by the historic surge in False Claims Act enforcement—including settlements and judgments exceeding $6.8 billion, over 1,200 qui tam lawsuits filed by whistleblowers, and over 400 investigations opened by the government.[2] Assistant Attorney General Brett Shumate’s May 27, 2026 memorandum, “Accelerating Review and Enhancing Enforcement of Benefits Fraud Matters,” already instructs civil prosecutors to accelerate their assessment of qui tam complaints directed at fraud against federally funded, state-administered programs.[3]
• Government procurement and government programs. Schemes involving “the public trust or financial integrity of Americans and markets related to procurement, government contracts, and other government functions.” The reference to “other government functions” extends this category well beyond procurement to the benefit and grant programs whose abuse animated the creation of the Division in the first instance.
• Revenue. Schemes involving “significant evasion of internal or external revenue.” “Significant” is the only qualifier in any of the four priorities, suggesting a focus on revenue fraud schemes that meet the $25 million threshold listed in the factors (described below).
• Trade and imports. Schemes involving “tariff evasion, importation of goods or services, or forced labor.” Trade fraud has been among the administration’s most active enforcement areas: the Trade Fraud Task Force launched in August 2025 has reported more than $1 billion in recoveries, penalties, forfeitures, and charged losses,[4] and the Fraud Division now has a dedicated Global Trade & Commerce Enforcement Section. The memorandum’s reference to “services,” which are not subject to customs duties, signals that the category could also extend to fraud involving abuse of visa programs, which has been an area of focus for the Department.[5]

These priorities closely track the Criminal Division’s May 2025 white-collar enforcement plan, which identified ten “high-impact areas,” including health care, procurement, and federal program fraud; trade and customs fraud, including tariff evasion; and violations of the Controlled Substances Act and the FDCA.[6] In effect, the Fraud Division appears to have taken the part of that agenda aimed at fraud on the public fisc.

The Criminal Division’s Fraud Section—now renamed the White Collar and Corporate Enforcement Section—will continue to bring cases involving securities fraud, violations of the Foreign Corrupt Practices Act, and health care fraud.[7] It remains to be seen how the White Collar and Corporate Enforcement Section and Fraud Division will handle areas of potential overlap in corporate enforcement, such as health care fraud.

The Fraud Division’s Ten Factors in Resolving Corporate Investigations

The memorandum directs Fraud Division prosecutors to continue following the Principles of Federal Prosecution of Business Organizations, which set out the traditional factors (the so-called “Filip Factors”) prosecutors consider in deciding whether and how to charge a corporation.[8] The memorandum also directs prosecutors to “place great weight on” ten specific factors in deciding whether to bring charges and negotiating plea or other agreements:

• 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;
• Conduct that furthers the scheme lasting three years or more;
• 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;
• Conduct that affects multiple taxpayer-funded programs or government functions;
• Conduct that affects three federal districts or more;
• Conduct that results in financial harm to twenty-five 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.

Not all ten factors are new factors for prosecutors to consider. Several restate considerations that prosecutors already weigh under the Filip Factors, which the memorandum expressly preserves. For example, management's knowledge of or involvement in the scheme maps against the “pervasiveness of wrongdoing within the corporation, including the complicity in, or the condoning of, the wrongdoing by individuals in corporate management” consideration in the Filip Factors. Similarly, the memorandum’s factors relating to the length and breadth of the misconduct overlap with the Filip Factor on “the nature and seriousness of the offense.” Companies and their counsel have long based their decision of whether to voluntarily disclose and their advocacy around these considerations. Other factors, however, are new and deserve close attention. These include: (1) specific focus on conduct affecting multiple taxpayer-funded programs or government functions; (2) actions threatening the safety or security of Americans, including military readiness; (3) the exfiltration of American dollars to support foreign adversaries; and (4) immigration offenses. Regardless, based on the Corporate Enforcement Memorandum, the Fraud Division’s ten factors are to be considered in addition to, rather than in substitution for, the traditional Filip Factors.

The new factors in particular provide a further gloss on the priorities and provide insight into the areas of focus for the Fraud Division. For example, the reference to “military readiness” signals a focus on defense contractors and the “exfiltration of American dollars to support foreign adversaries” appears aimed at schemes whose proceeds flow abroad to adversary-linked actors, such as transnational health care and benefits fraud networks. The reference to immigration offenses, not traditionally an area of government fraud, could reflect a focus on visa-related offenses and more broadly reflects that the Fraud Division may consider the administration’s priorities in its charging decisions.

The dollar thresholds are also notably low, at least by typical corporate investigations standards. For instance, a three-year billing scheme across a regional health care provider network that generates $25 million in claims could easily satisfy three factors. As discussed below, that could have significant implications for how the Corporate Enforcement Policy will operate.

The Fraud Division’s Structure and Other Elements

The memorandum also provides greater detail on how the Division will be structured and investigate cases:

• The Corporate Enforcement Section: Prosecutors must report all ongoing corporate investigations to the Chief of the Corporate Enforcement Section within seven days, notify the Section of new investigations and major developments, and work with it “at all phases of corporate investigations, from case intake through completion of any corporate resolution or litigation.” The Section will also take primary responsibility for overseeing compliance with corporate resolutions, which the memorandum says will free the prosecuting sections “to pursue additional individual and corporate cases,” and it can support U.S. Attorneys’ Offices on fraud matters.
• Data Analytics: The memorandum reinforces that the Fraud Division is “proactively generating leads and opening new individual and corporate fraud investigations at a rapid pace” by leveraging an infusion of resources, state-of-the-art technology, and data analytics through the National Fraud Detection Center and partner components. As we discussed in a prior client alert, the Fraud Division has emphasized that it will utilize data analytics as a tool for identifying fraud and bringing investigations.
• Whistleblowers: The memorandum states that the Division’s policies “must encourage and protect the disclosure of information by whistleblowers, including by those who participated in the criminal conduct,” and directs Division leadership to design programs that incentivize them. That departs from the Department’s Corporate Whistleblower Awards Pilot Program, under which an individual who “meaningfully participated in the criminal activity they reported” is presumptively ineligible.[9]

Key Takeaways for Companies

The Fraud Division is building a corporate enforcement apparatus around the administration’s priorities and bringing in an array of new factors that prosecutors will consider. The memorandum offers signals about where the Division is likely to focus its significant resources. It points toward corporate cases against health care industry participants; defense contractors; importers, including for transshipment and forced-labor violations; and large corporate tax schemes. In terms of the size of the matters, the quantitative metrics—cases with at least $25 million in loss, three districts or three years—provide a framework for the type of cases that the Division is likely to focus on.

Companies with exposure to the Division’s priorities—including companies in the health care, importing, and defense contracting businesses—should consider the following:

• Reassess the voluntary self-disclosure calculus. For companies considering filing a voluntary self-disclosure under the recently announced Corporate Enforcement Policy (“CEP”), the memorandum may point to a more complicated path towards a declination. While the memorandum states that the Fraud Division will follow the CEP, what that means in practice may be more complex than the memorandum states on its face. The CEP provides under Part I that a declination should be presumed if a company voluntarily self-discloses misconduct and there are no “aggravating circumstances related to the nature and seriousness of the offense.” If the ten factors are viewed by the Fraud Division as indicators of the nature and seriousness of the offense, it is possible that they could be used by prosecutors to shift a case from a declination under Part I to a Non-Prosecution Agreement under Part II or even a harsher resolution if the prosecutors found there to be “particularly egregious or multiple aggravating circumstances.” Right now, it remains to be seen how the Fraud Division will implement the CEP in practice. Companies weighing the risks and benefits of a voluntary self-disclosure should give careful consideration to how the facts of their case fit against the Fraud Division’s four priorities and ten factors, alongside the Filip Factors. If a company does decide to self-disclose, it should also give careful consideration to whether to disclose to the Fraud Division, the Criminal Division, and/or a U.S. Attorney’s Office. Finally, companies that voluntarily self-disclose to criminal prosecutors also must anticipate and assess the potential civil or parallel administrative consequences in connection with the self-disclosure.
• Expand the definition of fraud risk. The memorandum points toward an expansive view of what the Fraud Division may investigate, and companies should review their compliance programs against these priorities. For example, customs issues have historically been handled as civil and administrative matters, but given the focus on these issues, importers should consider this a significant risk area. Additionally, FDCA and controlled substances-related enforcement, which could reach a wide range of activities, from product counterfeiting and diversion to off-label promotion and false advertising, and immigration compliance are within the scope of the memorandum and should be treated as risk areas in considering how to design a compliance program.
• Know your data. As we noted in a prior client alert, companies should perform the type of peer comparisons a prosecutor or qui tam relator would run on publicly available data, apply anomaly detection to internal data, and establish a protocol for reviewing outliers and, where appropriate, investigating them under privilege.
• Assess risk against the ten factors. Internal investigations and the decision of whether to voluntarily disclose have typically been assessed against the Filip Factors. They should now also track the memorandum’s priorities and its additional factors, with look-backs of at least three years to test the duration threshold.
• Continue to maintain a robust ethics and compliance program. As focus areas and enforcement trends continue to shift and take shape, companies should continue to ensure that their compliance programs are well-designed, adequately resourced, and working effectively. Companies may need to update their risk assessment to better calibrate against the Department’s stated priority areas. They should then review their programs against the Department’s priority areas, confirm those risks are adequately covered, and fine-tune resources in a targeted and risk-calibrated way. Given the Department’s focus on the use of data analytics, companies should evaluate their own testing and monitoring mechanisms and consider further investment in tools that support the detection of fraud schemes. Further, given that the statute of limitations on many offenses will continue beyond this administration, it is important to ensure that compliance programs continue to address enforcement risks that may not be priorities at the moment.

The Paul Hastings team will continue to monitor the Fraud Division’s enforcement policies and provide further updates as appropriate.