DOJ’s New Fraud Division Releases New Directive Targeting Health Care, Defense, Tax, Trade, and Fraud on Government Programs

On October 1, 2026, the Department of Justice’s (“DOJ” or the “Department”) new National Fraud Enforcement Division (“NFED” or the “Fraud Division”) issued Directive 26-12 (the “Directive”), setting new corporate enforcement priorities in health care, government contracting, defense, tax, and trade fraud.¹ The Directive builds on DOJ’s longstanding principles related to prosecuting corporations and recently amended policies concerning corporate enforcement, pairing the Department’s promise to credit companies that self-report, cooperate, and remediate with a pledge to “zealously prosecute corporate actors that defraud taxpayers.”² On substance, the Directive gives the Fraud Division’s Corporate Enforcement Section additional authority over corporate investigations, resolutions, and compliance; names priority areas for targeted enforcement; and sets out ten factors to which prosecutors must give “great weight” in deciding whether to bring charges and how to resolve a case.³ The Directive also tasks Fraud Division leadership with designing whistleblower incentive programs, including for individuals who participated in the misconduct.⁴ The details of the whistleblower programs are still to come, but the direction is clear: DOJ wants information from inside companies, including from people who were involved.

The Directive at a Glance

Centralization of Corporate Enforcement Matters

In April, DOJ announced the creation of the new Fraud Division as part of an effort to centralize fraud enforcement and ensure a cohesive approach throughout the Department.⁵ The Directive bolsters these efforts by requiring Fraud Division prosecutors to work with the new Corporate Enforcement Section “at all phases of corporate investigations, from case intake through completion of any corporate resolution or litigation,” with the Corporate Enforcement Section taking the lead in evaluating compliance with corporate criminal resolutions.⁶

Four Investigative Priorities: Health Care, Government/Defense Contracts, Tax/Tariff Evasion, and Import/Export Controls

The Directive directs Fraud Division prosecutors, in opening and conducting corporate investigations, to prioritize fraud schemes relating to:

1. health care, specifically, “distribution of controlled substances, and violations of the Federal Food, Drug, and Cosmetic Act” (“FDCA”);
2. government and defense contracts “and other government functions”;
3. “significant” evasion of tax and tariff payments; and
4. import-export controls and forced labor.⁷

The Ten “Great Weight” Factors

For companies facing a potential investigation, the most significant change is that the Directive requires Fraud Division prosecutors to place “great weight” on ten factors “in determining whether to bring charges and negotiating plea or other agreements.”⁸ These factors can be grouped into four categories: (1) corporate culpability, including management’s “[k]nowledge of or involvement in [the] scheme” and any efforts to hide the scheme or hinder investigations; (2) duration and scale, focusing on conduct lasting three or more years, reaching three or more federal districts, or causing “[f]inancial harm to twenty-five or more victims or $25 million or more in loss”; (3) harm to the government, considering whether the conduct caused “substantial financial hardship to” or affected “multiple taxpayer funded programs or government functions”; and (4) national security and policy priorities, including threats to Americans’ safety or security or military readiness, financial support to foreign adversaries, and immigration offenses.⁹ Specifically, prosecutors must give the most weight to the following ten factors:

1. Knowledge of or involvement in the fraud scheme by corporate management;
2. Efforts to conceal fraud from government agencies or auditors, or otherwise to impede or obstruct a government function or oversight;
3. Conduct furthering the scheme lasting three years or more;
4. Actions threatening the safety or security of Americans, including military readiness;
5. Conduct causing substantial financial hardship to a taxpayer-funded program or government function;
6. Conduct affecting multiple taxpayer-funded programs or government functions;
7. Conduct affecting three or more federal districts;
8. Financial harm to 25 or more victims or $25 million or more in loss;
9. Exfiltration of American dollars to support foreign adversaries; and
10. Conduct involving immigration offenses.¹⁰

The list is not exclusive though. Prosecutors can weigh other relevant factors consistent with the Justice Manual, and they must still apply the Corporate Enforcement Policy (“CEP”).¹¹

Forthcoming Whistleblower Incentive Programs

As part of DOJ’s efforts¹² to root out, investigate, and penalize individual and corporate perpetrators, the Directive promises new “policies and programs that appropriately incentivize whistleblowers to bring forward credible information pertaining to fraud.”¹³ Significantly, these forthcoming whistleblower incentives will be available to individuals who were themselves part of the criminal activity.¹⁴

What Companies Should Do Now

The centralization of corporate enforcement within the Fraud Division is intended to create greater uniformity in the evaluation and resolution of investigations into potential corporate misconduct. A few immediate takeaways:

Expect increased enforcement. The Fraud Division’s Directive comes on the heels of recent announcements about large staffing increases and a commitment to combat fraud on government programs. White collar enforcement is likely to increase given these major announcements and the Administration’s commitment to combating fraud.

Health care companies, government and defense contractors, and other companies that do business with the government should take notice. The government is signaling a strong effort to increase investigations and enforcement against companies that profit from government contracts. Now, more than ever, it is important to ensure that internal compliance and audit operations are working effectively to prevent, detect, and remediate any concerns before they get the government’s attention.

A company that becomes the subject of a Fraud Division investigation should expect the Corporate Enforcement Section to be involved from intake through resolution, so decisions about cooperation and disclosure should be made with the Corporate Enforcement Section in mind from the outset.

Companies already operating under a corporate resolution should expect the Corporate Enforcement Section, not the original prosecuting team, to lead the review of their compliance program and reporting obligations and should be ready to show that the program works in practice, not just on paper. For some companies, this could present a new opportunity to make their case to a new set of prosecutors who may not have investigated the underlying misconduct and may be more receptive to evidence of remediation.

Health care companies, particularly hospitals, telehealth clinics, and pharmaceutical companies, should remain on high alert, given the Administration’s continued focus on this industry, and should review their controlled-substance distribution and FDCA compliance in particular.

Government contractors, especially defense contractors, as well as companies in international trade and those with significant tax or customs exposure, should evaluate their existing risk assessments and compliance programs against Fraud Division priorities, paying special attention to the “great weight” factors: whether managers knew of or took part in any problematic conduct, whether anything was withheld from government agencies or auditors, whether an issue has gone on for three years or more, and how far any harm reached and how much government funding was involved. If a review turns up potential issues, a prompt, privileged internal investigation will help the company make an informed decision about disclosure. Engaging experienced counsel early can help preserve privilege, measure exposure against the Fraud Division’s priorities and the “great weight” factors, and shape any disclosure decisions.

With whistleblower incentive programs on the way, companies should expect more employees to take their concerns straight to the government, including employees who may have been involved in the misconduct. Companies should ensure employees have a credible internal option through trusted and well-publicized hotlines and speak-up channels, robust anti-retaliation protections, and prompt escalation and investigation of any internal reports. A company that learns of potential misconduct should consider voluntary self-disclosure under the CEP right away, because credit generally turns on how quickly and completely it comes forward. Speed matters. The Fraud Division is already using “state-of-the-art technology, and data analytics” to generate leads, and whistleblower incentives are coming.¹⁵ Companies should decide now who will evaluate a potential disclosure and how quickly, rather than working that out after a problem surfaces. Potential issues should reach senior management and the board quickly, given the weight placed on management knowledge. Relevant documents and data should be preserved as soon as an issue is identified. And a company operating under an existing corporate resolution should prepare for compliance reviews led by the Corporate Enforcement Section.

Conclusion

The Directive signals that DOJ intends to pursue corporate fraud on the government aggressively in its priority sectors while offering a more structured, transparent framework for how it will weigh corporate conduct and credit good-faith behavior. Companies that invest now in targeted compliance, effective internal reporting, and thoughtful disclosure decision-making will be best positioned to benefit from that framework rather than be caught by it. We are watching how the Fraud Division implements the Directive, particularly any whistleblower program announcements. Now more than ever, it is important for companies to assess their exposure before those details emerge and leave them flat-footed.

¹See Memorandum from Colin M. McDonald, Ass’t Att’y Gen., Nat’l Fraud  Enf’t Div., Dep’t of Justice, to All Fraud Div. Pers., Directive 26-12: Corporate Enforcement in the Fight Against Fraud (Oct. 1, 2026), available at https://www.justice.gov/opa/media/1463571/dl?inline.

²Id. at 2.

³See generally id.

⁴See id. at 4–5.

⁵See Press Release, U.S. Dep’t of Justice, Office of Pub. Affairs, Acting Attorney General Todd Blanche Issues Memorandum on the Creation of the National Fraud Enforcement Division (Apr. 7, 2026), available at https://www.justice.gov/opa/pr/acting-attorney-general-todd-blanche-issues-memorandum-creation-national-fraud-enforcement.

⁶Directiveat 2–3.

⁷See id. at 3–4.

⁸Directiveat 4.

⁹See id.

¹⁰Id.

¹¹See Press Release, U.S. Dep’t of Justice, Crim. Div., Department of Justice Releases First-Ever Corporate Enforcement Policy for All Criminal Cases (Mar. 10, 2026), available at https://www.justice.gov/opa/pr/department-justice-releases-first-ever-corporate-enforcement-policy-all-criminal-cases.

¹²See Press Release, U.S. Dep’t of Justice, Nat’l Fraud Enf’t Div., Department of Justice Announces Launch of National Fraud Detection Center to Combat Fraud Against Taxpayer-Funded Programs (Aug. 24, 2026), available at https://www.justice.gov/opa/pr/department-justice-announces-launch-national-fraud-detection-center-combat-fraud-against.

¹³Directive at 5.

¹⁴See id.

¹⁵See id. at 4–5.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.