Justice Department’s “Civil Rights Fraud Initiative” Increases False Claims Act Risks Related to Alleged Discrimination

The Initiative is the latest broadside by the Trump administration against “diversity, equity and inclusion (DEI) programs” and illustrates a 360-degree approach on social issues from the boardroom to the bathroom. Specifically, DAG Blanche’s memo provides examples of the types of cases DOJ intends to pursue, such as cases against “universit[ies]” that “encourage[] antisemitism, refuse[] to protect Jewish students, allow[] men to intrude into women’s bathrooms, or require[] women to compete against men in athletic competitions.” Outside of the higher education context, the memo also announces a focus on entities that “engage[] in racist preferences, mandates, policies, programs, and activities, including through diversity, equity, and inclusion (DEI) programs that assign benefits or burdens on race, ethnicity, or national origin.”

The use of the FCA in these contexts, coupled with encouragement for qui tam relators to file lawsuits alleging discriminatory conduct, will likely lead to increased investigations and litigation.

Scope of the Civil Rights Fraud Initiative

According to DAG Blanche’s memo, DOJ will prioritize enforcement efforts under the FCA against “those who defraud the United States by taking its money while knowingly violating civil rights laws.” The memo cites President Trump’s January 21, 2025 Executive Order (EO) 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, and Attorney General Pam Bondi’s Memorandum, Ending Illegal DEI and DEIA Discrimination and Preferences (Feb. 5, 2025) targeting what EO 14173 describes as “illegal DEI” and “diversity, equity, inclusion, and accessibility” policies. DAG Blanche’s memo also follows reports that DOJ is conducting an FCA investigation into Harvard University’s admissions programs, though other colleges and universities are clearly in the administration’s crosshairs.²

The FCA imposes treble damages and penalties on persons or entities who knowingly present, or cause to present, false or fraudulent claims for payment to the government. Originally enacted during the Civil War and strengthened through amendments in 1986, the statute is regularly used to bring fraud cases against defendants in areas such as healthcare, procurement, and large government relief programs like the Troubled Asset Relief Program (TARP), Iraq and Afghanistan rebuilding, and COVID-relief forgivable loans.

Through the Initiative, DOJ will pursue investigations under the FCA — which DAG Blanche’s memo describes as the government’s primary civil remedy to combat fraud against the government — premised on alleged violations of civil rights laws, such as cases of race, sex, or national origin discrimination under Titles IV, VI, and IX of the Civil Rights Act of 1964 as amended. The memo also cites the U.S. Supreme Court’s 2023 “SFFA Decision,”³ which struck down the race-conscious admissions systems of two universities under the Equal Protection Clause of the 14th Amendment.

The FCA Enforcement Mechanism; Whistleblower Incentives

Although the FCA has been used in the past to redress certain alleged civil rights violations, the Civil Rights Initiative represents a significant effort to aggressively use the FCA as a tool to advance the administration’s new policy initiatives to combat DEI, antisemitism, and other programs that the administration alleges are antisemitic or discriminatory.

It is anticipated that DOJ will initiate cases on its own, but the memo also “strongly encourages” third party whistleblowers, known as qui tam relators, to file lawsuits on behalf of the government regarding alleged civil rights fraud. It further encourages anyone with “knowledge of discrimination by federal-funding recipients to report that information” to federal authorities.

Qui tam relators are the source of a majority of DOJ’s FCA investigations every year. According to DOJ’s publicly released statistics, there were a record-breaking number of qui tam suits filed in FY 2024 (979), with settlements and judgments exceeding $2.4 billion, and individual whistleblowers receiving more than $400 million in damages.⁴ FCA investigations can also lead to parallel retaliation lawsuits against companies. After engaging in “lawful acts” “in furtherance of” a qui tam action, “employees, contractors and agents” may be protected from certain “retaliatory actions” under the FCA.⁵ Allegations of retaliation can lead to additional risk exposure for entities, including a civil action by the aggrieved employee, contractor, or agent.

Coordination with Other Government Agencies

The Initiative will involve coordination between DOJ’s Civil Fraud Section and its Civil Rights Division, with additional enforcement engagement from the Criminal Division, the United States Attorneys’ Offices, and state attorneys general, as well as other federal agencies that enforce civil rights requirements for federal funding recipients.

As a result — and as has occurred with past DOJ efforts to encourage FCA enforcement in areas such as pandemic-relief fraud and cybersecurity — the Initiative is likely to result in an increase in civil and criminal fraud investigations and qui tam whistleblower cases, increasing risk for entities that may have been less susceptible to FCA scrutiny in the past.

Issues from the Timing of Executive Orders

FCA cases brought under the Initiative will focus on the extent to which companies or entities have made knowingly false express or implied representations of compliance with civil rights laws that could trigger alleged FCA liability. To violate the FCA, a claim for payment must be false or fraudulent and must be made knowingly. False claims are knowing if they are made with actual knowledge, reckless disregard, or deliberate ignorance. Among the key questions in cases stemming from the Initiative will be which civil rights laws and regulations apply to a defendant’s conduct and whether that conduct constituted non-compliance at the time it occurred. With the issuance of new executive orders — as well as the expiration of grace periods on prior executive orders — federal funds recipients must carefully confirm the requirements of applicable law at the time of any certification.

Insights From DOJ’s History of Using the FCA for Civil Rights Enforcement

Past cases in which DOJ has used the FCA in conjunction with civil rights enforcement demonstrate the powerful enforcement tools available to DOJ and the significant consequences that can result from violations.

For instance, in August 2024, DOJ announced an FCA settlement with the City of Los Angeles, which agreed to pay $38.2 million to resolve allegations that it knowingly failed to meet federal accessibility requirements when it sought and used Department of Housing and Urban Development (HUD) grant funds for multifamily affordable housing.⁶ In addition to alleging that the City violated civil rights laws including the Rehabilitation Act, the Americans with Disabilities Act, and the Fair Housing Act, DOJ also alleged that the City violated the FCA when, on an annual basis, it allegedly falsely certified to HUD that it complied with the grant’s accessibility requirements.

Similarly, in 2009, DOJ announced an FCA settlement resolving allegations that Westchester County, New York made false HUD certifications.⁷ There, the government alleged that the County had repeatedly certified to HUD that it was meeting its obligations to affirmatively further fair housing, when, according to the government, the County had failed to analyze and address the housing needs of racial or ethnic minorities or the effects of racial or ethnic discrimination. To settle the case, the County agreed to expend $30 million of County funds, to pay the United States an additional $30 million for housing development, and to submit to the oversight of a court-appointed monitor.

While these examples focused on housing discrimination rather than corporate DEI or higher education, they illustrate the heightened risk exposure created when the FCA and civil rights enforcement merge.

Takeaways

All recipients of federal funds, such as universities and federal contractors, would be well-advised to take notice of the Initiative and be alert to the risks that are now involved when certifying compliance with federal civil rights laws and other related statements to the government, particularly in the realm of admissions and hiring practices and matters concerning anti-discrimination. Companies should stay informed about any new executive orders and the Trump administration’s views on civil rights compliance, which is crucial to understanding and managing those risks. Under the circumstances, companies, universities, and government contractors may find it advisable to perform a risk assessment that can help identify areas of exposure and take proactive measures to come into compliance with evolving government expectations.

¹ Deputy Attorney General Memorandum, Civil Rights Fraud Initiative  (May 19, 2025), available at https://www.justice.gov/dag/media/1400826/dl?inline.

² Michael C. Bender & Michael S. Schmidt, Trump Administration Escalates Harvard Feud With New Justice Dep’t Investigation, N.Y. Times, May 15, 2025.

³ Students for Fair Admissions, Inc. v. President & Fellows of Harv. Coll., 600 U.S. 181 (2023).

⁴ Press Release, U.S. Department of Justice, False Claims Act Settlements and Judgments Exceed $2.9B in Fiscal Year 2024, Press Release Number: 25-58, available at https://www.justice.gov/archives/opa/pr/false-claims-act-settlements-and-judgments-exceed-29b-fiscal-year-2024 (last accessed May 27, 2025).

⁵ 31 U.S.C. § 3730.

⁶ Department of Justice, City of Los Angeles Agrees To Pay $38.2M To Resolve False Claims Act Suit For Alleged Misuse of Department of Housing and Urban Development Grant Funds (Aug. 26, 2024), available at https://www.justice.gov/archives/opa/pr/city-los-angeles-agrees-pay-382m-resolve-false-claims-act-suit-alleged-misuse-department.

⁷ Department of Justice, Westchester County Agrees to Develop Hundreds of Units of Fair and Affordable Housing in Settlement of Federal Lawsuit (Aug. 10, 2009), available at https://www.justice.gov/sites/default/files/crt/legacy/2010/12/15/westchester_pr.pdf.