DOJ Establishes National Fraud Enforcement Division

Overview

On April 7, 2026, Acting Attorney General Todd Blanche issued a memorandum establishing the National Fraud Enforcement Division (NFED) within the U.S. Department of Justice (DOJ). This new division will be dedicated to the centralized, coordinated investigation and prosecution of fraud against taxpayer dollars and taxpayer-funded programs. AAG Blanche acknowledged that, while DOJ has a “storied history of combatting fraud,” DOJ has “never adopted a comprehensive and coordinated approach to investigating and prosecuting fraud against taxpayer dollars and tax-payer funded programs.” The NFED was created to close that gap with its core mission being to “zealously investigate and prosecute those who steal or fraudulently misuse taxpayer dollars.”

The NFED is designed to support last month’s Executive Order 14395, "Establishing the Task Force to Eliminate Fraud," a whole-of-government initiative established to eliminate fraud, waste, and abuse in federal benefit programs. Just days after the White House issued EO 14395, the U.S. Senate approved Colin McDonald’s nomination for Assistant Attorney General for Fraud Enforcement. McDonald will lead the NFED. 

Structure, Implementation, and Enforcement Actions

Effective immediately, the NFED will assume operational control of three existing Criminal Division components: (1) the Tax Section, (2) the Health Care Fraud Unit, and (3) the Market, Government, and Consumer Fraud Unit. During a transitional period, existing supervisory chains will remain in place while the NFED sets enforcement priorities.

The memorandum also establishes an implementation timeline that will bring about further changes to DOJ and NFED:

• Within 21 days, each U.S. Attorney’s Office must designate an experienced prosecutor to serve as a dedicated NFED representative in that district.
• Within 30 days, DOJ leadership will determine which additional criminal units and sections will be absorbed into the NFED, with a stated presumption that units with overlapping missions will be consolidated.
• Within 45 days, DOJ must review the Justice Manual, relevant Department guidance, regulations, and memoranda to determine whether updates or edits are required.
• Within 90 days, DOJ must complete a review of existing fraud-related laws, regulations, and guidelines and recommend measures to strengthen enforcement authority and penalties.
• Within 120 days, DOJ will decide whether to bring civil enforcement functions — potentially including the Civil Division's False Claims Act (FCA) enforcement — within the NFED’s mandate. That outcome could have significant implications for companies involved in qui tam litigation or subject to civil investigative demands.

Along with shifting resources to the NFED, the memorandum also tasks the NFED with establishing a National Fraud Detection Center dedicated to identifying fraud across taxpayer-funded programs and generating leads for investigators and prosecutors. DOJ has already issued examples of the types of cases it intends to bring under the NFED, including three separate civil and criminal enforcement actions involving schemes that allegedly sought to fraudulently bill taxpayer-funded programs of over $500 million. AAG Blanche framed the actions as a signal of the administration’s enforcement posture: “In one day, the Department prosecuted the theft of a half-billion in taxpayer dollars. All those ripping off the American people are on notice.”

What This Means

The consolidation of dedicated prosecutorial units, the embedding of fraud prosecutors across all federal districts, and the planned National Fraud Detection Center in theory suggest an increase in enforcement activity involving federally funded programs. Companies that participate in or receive funds from taxpayer-funded programs should consider the following steps in response:

• Review existing compliance programs to ensure they address the NFED's core enforcement priorities — fraudulent billing, false claims, improper use of tax credits, and misrepresentation in connection with government benefit programs.
• Reassess internal reporting and disclosure practices. The NFED's cross-agency coordination mandate and planned National Fraud Detection Center are aimed at increasing the likelihood that irregularities will be identified externally before they surface internally. Proactive self-disclosure and remediation will be critical to mitigating enforcement risk.
• Monitor the forthcoming policy reviews closely. The reviews of existing fraud-related law and guidance, and the question of whether civil enforcement functions will be brought within NFED’s mandate, could yield expanded enforcement authority and new compliance obligations, including extension of the NFED’s reach into civil enforcement including under the FCA.
• Ensure leadership is prepared to respond. Boards, senior leadership, and compliance functions should be aligned on the elevated enforcement environment and positioned to respond promptly to government inquiries, civil investigative demands, or enforcement actions.

Key Open Questions

While the memorandum signals a clear and significant reorganization of DOJ’s approach to fraud enforcement, it leaves a number of important implementation questions open:

• Interim governance: The memorandum creates a dual-reporting structure in which existing supervisors retain day-to-day personnel authority while the NFED sets enforcement priorities. It does not specify when this arrangement will end or how conflicts between the two chains of command will be resolved, leaving uncertainty about which office is driving enforcement decisions in the near term.
• Scope of consolidation: The memorandum applies a “reasonable presumption” that units with a similar mission will be absorbed into the NFED but does not define the criteria for that determination. Nor does it explain what will happen to fraud-related units that are not absorbed into the NFED, such as the Fraud Section’s Foreign Corrupt Practices Act (FCPA) and Health and Safety Units.
• Oversight of existing matters: The memorandum does not address whether the NFED will exercise approval authority over charging decisions, plea agreements, or settlements in cases already underway in individual U.S. Attorney’s Offices — a question of immediate concern for companies currently engaged with federal prosecutors.
• Civil enforcement authority: The 120-day review could bring civil enforcement functions, including FCA authority, into the NFED. If it does, companies should expect tighter coordination between civil and criminal enforcement tools, with potential implications for existing FCA investigations.

Conclusion

Companies that participate in government programs, receive federal funds, or operate in sectors with significant government contracting or benefit-program exposure should take note of these developments. Robust compliance programs, well-documented internal controls, and proactive monitoring of fraud risk are more important than ever as DOJ centralizes and expands its fraud enforcement infrastructure.

Our lawyers are closely monitoring these developments and are available to advise clients on the implications for their compliance programs, government program participation, and any existing or anticipated government investigations.