DOJ Announces Enforcement Priorities for National Fraud Enforcement Division

Assistant U.S. Attorney General (AAG) Colin McDonald on August 13, 2026, issued a memorandum (McDonald Memorandum) to U.S. Department of Justice (DOJ or Department) Fraud Division personnel establishing enforcement priorities for the newly created National Fraud Enforcement Division (Fraud Division). The McDonald Memorandum provides companies with an important road map of where DOJ intends to focus its fraud-enforcement resources and highlights the Department's increasing reliance on cross-agency coordination, data analytics and technology to identify potential misconduct.

Background

Earlier this year, President Donald Trump announced the creation of a new National Fraud Enforcement Division within DOJ. The Fraud Division is organizationally separate from DOJ's Criminal Division and Fraud Section (now called the White Collar and Corporate Enforcement Section) and is led by AAG McDonald.

The Fraud Division's stated mission is broad: to prosecute fraud in the U.S. regardless of its size or complexity. The McDonald Memorandum cites U.S. Government Accountability Office estimates that the federal government loses between $233 billion and $521 billion annually to fraud.

To carry out that mission, DOJ is reorganizing substantial resources into the new Division, which the McDonald Memorandum indicates is expected to continue growing over the next two years. The Fraud Division is organized into multiple specialized litigating sections, including a Healthcare Fraud section, Public Trust and Financial Integrity section, Tax Section, Global Trade and Commerce Enforcement section, Corporate Enforcement section, National Fraud Detection Center, Asset Recovery section and others.

AAG McDonald emphasized that the Division is designed to be "lean, flat, and agile," with reduced bureaucratic oversight and prosecutors deployed across the country to work directly with U.S. Attorneys' Offices. This structure signals an intent to move cases more quickly and with fewer institutional barriers than traditional DOJ components.

Key Enforcement Priorities

The McDonald Memorandum, issued after finalization of the reorganization within DOJ's Criminal Division, identifies five priority enforcement areas:

Public Trust and Financial Integrity. The Division will focus on protecting the financial integrity of government programs and the broader American economy. Priority targets include:

• government procurement fraud, including defective pricing, bid rigging, self-dealing, bribery, product substitution and billing frauds
• fraud affecting government program integrity, including student loans, childcare subsidies, veterans' benefits, nutritional supplement programs, disaster relief and small business programs
• schemes that undermine market integrity and compromise the financial well-being of American consumers

Healthcare. The McDonald Memorandum sharpens the long-standing focus on the healthcare industry by singling out key focus areas including:

• telemedicine program fraud
• Medicare and Medicaid fraud
• controlled substance diversion and illegal prescribing of opioids
• home health and hospice schemes, including kickback arrangements
• deceptive marketing of unsafe products and services

Though none of this is new, the Division intends to "supercharge" the already successful Healthcare Fraud Strike Force model with increased resources, advanced data analytics and technology to identify and prosecute fraud more rapidly and on a greater scale. This corresponds with the recent spate of announcements of expansion of the Healthcare Fraud Strike Force in jurisdictions across the country. (See Holland & Knight's previous alerts, "DOJ Announces Expansion of Healthcare Fraud Enforcement in Greater Philadelphia," August 4, 2026, and "DOJ's NFED Expands Federal-State Partnerships Targeting Medicaid Fraud," August 6, 2026.)

Healthcare is already the most targeted industry for enforcement. Over the last decade, healthcare accounts for close to 80 percent of all False Claims Act (FCA) judgments and settlements, and there has been and remains robust criminal enforcement based on the Anti-Kickback Statute and other healthcare fraud statutes. The McDonald Memorandum  puts a particular spotlight on home health and hospice fraud, which again corresponds to recent announcements on a six-month moratorium on new provider enrollments in these areas.

According to the McDonald Memorandum, "[n]ational healthcare expenditures are expected to grow from over $3 trillion a year to over $7 trillion, and estimates are that between 3–10% of that amount is lost to fraud." Given the outlay of such significant sums, it is no surprise that healthcare remains a top enforcement priority for the Division.

Internal Revenue. IRS Criminal Investigation (IRS-CI) remains one of the most sophisticated agencies for financial crime investigations in the arsenal of the DOJ and federal law enforcement agencies. Likewise, after the dissolution of the DOJ Tax Division in 2025, those specially trained financial crime prosecutors have been integrated into the Fraud Division, leading to a substantial increase in the number of Fraud Division lawyers. The McDonald Memorandum states that "criminal tax enforcement is an integral part of the Fraud Division's mandate to protect the public fisc." However, the McDonald Memorandum makes clear that the primary focus of IRS-CI and Fraud Division prosecutors will not be traditional "legal income" tax evasion cases – i.e., businesspersons, lawyers, doctors or other professionals who file false individual tax returns underreporting their income. Although such investigations and prosecutions still will occur, the primary focus will be:

• investigations and prosecutions of persons who commit or facilitate government program fraud – for example, promotors of alleged schemes designed to commit fraud through COVID-era tax credit and relief programs, such as the Employee Retention Credit, Families First Coronavirus Response Act and other programs; and
• investigations and prosecutions of alleged abusive tax scheme promoters

The theme here is a focus on targets who commit alleged schemes at scale and encourage others for a fee to fraudulently obtain federal funds through tax credits, tax deductions or other programs as opposed to individual tax cheats. The McDonald Memorandum signals an intra-division and interagency coordination for a "the all-tools response" to allow for a full arsenal of criminal tax tools paired with data analytics, financial forensics and nationwide coordination. IRS-CI and supporting prosecutors therefore will take advantage of charges beyond Title 26 criminal tax charges, such as wire fraud, money laundering, bank fraud, identity theft and forfeiture claims. Such fraud cases, if prosecuted successfully, can produce potential U.S. Sentencing Guidelines outcomes much more onerous than "traditional" criminal tax cases.

Global Trade and Commerce. The Fraud Division will pursue trade fraud and customs evasion through DOJ's cross-agency Trade Fraud Task Force. Priority areas include:

• illicit transshipment schemes
• country-of-origin fraud
• undervaluation of imported goods to evade duties
• sanctions evasion
• foreign forced labor schemes and supply chains tainted by forced labor

These priorities fall on the heels of newly released Trade Enforcement Guidance with respect to customs and trade fraud to be handled by the Trade Fraud Task Force. The McDonald Memorandum describes the U.S. as the "center of the global economy, connecting the world through trade and foreign commerce" and ties enforcement of trade laws directly to the integrity of domestic markets and border security. It characterizes trade fraud and customs evasion as conduct that can undermine American industry, deprive the government of import revenue, fund foreign adversaries and compromise U.S. values.

The Fraud Division's emphasis on trade enforcement builds on DOJ's existing efforts in this area. The Trade Fraud Task Force, launched in August 2025, recently announced that it surpassed $1 billion in civil and criminal recoveries, penalties, forfeitures and publicly charged losses in its first year. Its enforcement reach also extends beyond importers of record to customs brokers, downstream distributors, commercial end users and other parties that knowingly profit from illegally imported merchandise. Most recently, DOJ and the U.S. Department of Homeland Security (DHS) issued new Trade Enforcement Guidance outlining an enhanced and coordinated approach to customs and trade fraud enforcement.

Taken together, the McDonald Memorandum and new DOJ-DHS guidance signal that trade and customs enforcement is now a well-resourced component of DOJ's broader fraud enforcement program. Companies engaged in importing, customs brokerage or cross-border supply chains should expect continued scrutiny of country-of-origin representations, valuation practices, transshipment risks and forced-labor exposure throughout their supply chains.

The administration is also placing particular emphasis on transshipment. On August 13, 2026 (the same day as the McDonald Memorandum), the White House Office of Trade and Manufacturing Policy issued a report titled The Great Transshipment Scam, identifying illegal transshipment as a significant customs enforcement priority. The report identifies more than 40 countries associated with elevated transshipment risk following the imposition of tariffs and proposes an artificial intelligence (AI)-enabled "Detective Border" initiative designed to help U.S. Customs and Border Protection (CBP) distinguish legitimate nearshoring and foreign investment from illegal transshipment and support duty collection, penalties and exclusion.

The same-day announcements underscore a government-wide focus on transshipment, combining DOJ enforcement with enhanced CBP detection and broader administration trade policy. Companies with supply chains involving third countries, particularly countries identified as presenting elevated transshipment risk, should expect increased scrutiny of whether goods have undergone sufficient production or transformation to support their claimed country of origin.

Corporate Misconduct. The Division will hold accountable organizations that flout the law while rewarding those that voluntarily self-disclose, cooperate and remediate. Key elements include:

• anti-fraud corporate enforcement working closely with the DOJ Corporate Enforcement Section
• consistent application of DOJ policies on prosecution of organizations
• emphasis on voluntary self-disclosure, cooperation credit and remediation as mitigating factors

This priority underscores the importance of robust corporate compliance programs and value of early voluntary disclosure when potential violations are identified.

Shifting Mandates and Overlapping Priorities

Many of the Fraud Division's stated enforcement priorities overlap significantly with the Criminal Division's previously announced priorities from May 2025. Prior to the Fraud Division's creation, the Criminal Division already prioritized healthcare fraud, procurement fraud, corporate enforcement and tax-related crimes.

The Fraud Division's creation consolidates and elevates these priorities under a single dedicated division, signaling an intensification rather than a wholesale shift in DOJ's fraud enforcement posture. The overlap suggests continuity of enforcement focus but with significantly enhanced resources (per the McDonald Memorandum) and a more streamlined organizational structure.

The focus on corporate misconduct will continue to be pursued by the newly minted White Collar and Corporate Enforcement Section within the Criminal Division. According to DOJ's website, this section will investigate and prosecute "complex cases involving white collar crime, including financial fraud, healthcare fraud, foreign corruption, and crimes that threaten public health and safety." This section reportedly will continue to focus on the Foreign Corrupt Practices Act, health and safety matters, and market, government and consumer safety issues. The Market, Government and Consumer Fraud unit's mandate appears to have been transferred into the Fraud Division with respect to government contracts and government benefit programs.

This consolidation trend was reinforced just days after the McDonald Memorandum. A final rule released August 17, 2026, and taking effect the following week formalizes the Fraud Division's enforcement jurisdiction over matters including internal revenue and healthcare fraud and gives the Division room to assume jurisdiction over other unspecified case types at the AG's discretion. The rule also delegates authority to McDonald to open special grand juries anywhere in the country and permits the Division to prosecute non-fraud criminal offenses that arise while investigating its core priorities. These authorities come at the expense of jurisdiction previously held by the Criminal Division.

Implications for FCA Exposure

The McDonald Memorandum's emphasis on a "whole-of-government" approach signals the potential for increased coordination among the Fraud Division, DOJ's Civil Division, U.S. Attorneys' Offices and other federal enforcement agencies.

The Fraud Division's enforcement priorities – particularly in government procurement fraud, healthcare fraud and government program integrity – create significant overlap with civil FCA enforcement priorities. The same conduct targeted by the Fraud Division (billing fraud, product substitution, defective pricing, Medicare/Medicaid fraud, grant fraud) constitutes the core subject matter of FCA civil enforcement.

Companies in healthcare, government contracting and grant-funded sectors face heightened dual-track (criminal and civil) enforcement risk. A single set of facts may give rise to both a criminal investigation by the Fraud Division and a civil FCA action by the DOJ Civil Division or a U.S. Attorney's Office.

Mitigation

The McDonald Memorandum reinforces DOJ's emphasis on voluntary self-disclosure, cooperation and remediation, explicitly identifying voluntary self-disclosure as a factor that will be rewarded in the Fraud Division's corporate misconduct enforcement.

This language is consistent with DOJ's broader institutional commitment to incentivizing proactive corporate disclosure. DOJ's existing policies such as the DOJ Corporate Enforcement Policy and Criminal Division's Corporate Enforcement and Voluntary Self-Disclosure Policy provide that companies making timely, voluntary disclosures of misconduct to the Department may receive significant mitigation credit, including potential declinations of prosecution where the company has also fully cooperated and implemented effective remediation.

The McDonald Memorandum further states that the Fraud Division will "fairly and consistently apply the Department's policies concerning the prosecution of organizations," confirming that these self-disclosure frameworks will govern the Fraud Division's charging decisions.

In practical terms, with enhanced detection capabilities such as AI and data analytics, fraud schemes may well be independently discovered by the government with increasing regularity. In this environment, the calculus favoring early voluntary disclosure becomes more compelling: Companies that self-disclose before the government discovers the conduct through its own investigative efforts are positioned to receive the maximum mitigation credit available under DOJ policy, while companies that delay or fail to disclose risk forfeiting these benefits entirely if the Division's detection apparatus identifies the misconduct independently.

Companies operating in the Fraud Division's priority areas should therefore work closely with counsel to evaluate whether potential violations warrant voluntary disclosure, balancing the benefits of mitigation credit against other considerations, and ensure that their internal investigation and reporting protocols are calibrated to enable timely disclosure decisions.

For further guidance, please contact the authors.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.