DOJ’s Fraud Division Announces “Aggressive” Approach to Fight Corporate Fraud

On October 1, 2026, Assistant Attorney General Colin McDonald, who leads the Department of Justice’s (DOJ’s) National Fraud Enforcement Division (NFED or the Division), issued a directive to all NFED personnel addressing “Corporate Enforcement in the Fight Against Fraud” (the Directive).Memorandum from Assistant Attorney General Colin M. McDonald, Directive 26-12: Corporate Enforcement in the Fight Against Fraud (Oct. 1, 2026), available at https://www.justice.gov/opa/media/1463571/dl?inline (the Directive). The Directive states that NFED prosecutors will take “an aggressive, all-tools approach to investigating and prosecuting [the Division’s] health care, government, tax, and trade fraud priorities.”Id. at 1.

The Directive describes several goals: (i) making the NFED’s corporate enforcement more efficient and fair, (ii) providing transparency to stakeholders, (iii) encouraging companies and whistleblowers to disclose misconduct, (iv) rewarding cooperation, (v) holding individual and corporate offenders accountable, and (vi) recovering fraud proceeds.Id.

The Directive underscores DOJ’s continued focus on its fraud enforcement efforts and builds on the NFED’s recent growth. Since DOJ established the NFED in April 2026,https://www.lw.com/en/insights/doj-establishes-national-fraud-enforcement-division; Memorandum from Acting Attorney General Todd Blanche, Establishment of the National Fraud Enforcement Division (Apr. 7, 2026) at 1, available at https://www.justice.gov/ag/media/1435311/dl?inline. the Division has assumed control of several DOJ Criminal Division components (including the Tax Section, the Health Care Fraud Unit, and parts of the Market, Government, and Consumer Fraud Unit),https://www.lw.com/en/insights/doj-national-fraud-enforcement-division-announces-sweeping-enforcement-priorities#fn25. added more than 500 attorneys and staff,Memorandum from Assistant Attorney General Colin M. McDonald, The Fraud Division’s Enforcement Priorities (Aug. 13, 2026), at 2, available at https://www.justice.gov/opa/media/1457756/dl?inline. and announced the NFED’s enforcement priorities, including corporate misconduct as a key priority.Id. at 1; https://www.lw.com/en/insights/doj-national-fraud-enforcement-division-announces-sweeping-enforcement-priorities#. This Directive provides more detailed information on how the NFED will focus its efforts on corporate fraud.

Confirmation of Priority Areas for Corporate Fraud Investigations

The Directive instructs NFED prosecutors to prioritize four types of fraud schemes when opening and conducting corporate investigations. Specifically, these fraud schemes involve:

1. The healthcare industry, including healthcare fraud, distribution of controlled substances, and violations of the Federal Food, Drug, and Cosmetic Act
2. The public trust or financial integrity of Americans and markets related to procurement, government contracts, and other government functions
3. Significant evasion of internal or external revenue
4. Tariff evasion, importation of goods or services, or forced labor

These priorities are not new: In August 2026, DOJ published a memorandum articulating the five enforcement priority areas for the Division, which align with the Directive: (i) public trust and financial integrity, (ii) healthcare, (iii) internal revenue, (iv) global trade and commerce, and (v) corporate misconduct.See note 5. For more details on that memorandum, see this Latham Client Alert.

In August 2025, the then-Head of the Criminal Division set out 11 enforcement priorities for white collar enforcement, with the first two priorities tracking much of the Division’s mandate. These include: (i) waste, fraud, and abuse, including healthcare fraud and federal program and procurement fraud that harm the public fisc; and (ii) trade and customs fraud, including tariff evasion.Memorandum from Acting Assistant Attorney General Matthew Galeotti, Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime (May 12, 2025), available at https://www.justice.gov/criminal/media/1400046/dl?inline=.

Assistant Attorney General McDonald stated that, although DOJ has focused on these areas in the past, going forward, the work “will be done in a coordinated, comprehensive way in the NFED.”Phillip Bantz, “DOJ Outlines New Corporate Fraud Enforcement Priorities,” Law360 (Oct. 1, 2026), available at https://www.law360.com/aerospace/articles/2532588/doj-outlines-new-corporate-fraud-enforcement-priorities.

Effort to Balance Aggressive Enforcement Against Overreach

In the Directive, Assistant Attorney General McDonald explains that the Division seeks to strike a balance between “zealously prosecut[ing] corporate actors that defraud taxpayers and the United States of America,” while at the same time “firmly guard[ing] against overbroad corporate enforcement.” As explained in the Directive, the Division does not want prosecutors to “interfere with legitimate business operations.”Directive at 2.

This theme is consistent with other messaging issued by DOJ during the Trump Administration, including a May 12, 2025, memorandumSee Note 9. setting enforcement priorities for white collar crime and instructing that “[p]rosecutors must avoid overreach that punishes risk-taking and hinders innovation,” and a June 9, 2025, memorandumMemorandum from Deputy Attorney General Todd Blanche, Guidelines for Investigations and Enforcement of the Foreign Corrupt Practices Act (FCPA), available at https://www.justice.gov/dag/media/1403031/dl. establishing guidelines for Foreign Corrupt Practices Act investigations to “limit[] undue burdens on American companies that operate abroad.”

The Directive does not detail how prosecutors will be expected to strike that balance, and instead cites existing policies on corporate enforcement, including the Principles of Federal Prosecution of Business Organizations and Department-wide Corporate Enforcement Policy (CEP).https://www.lw.com/en/insights/doj-corporate-enforcement-update-new-department-wide-self-disclosure-policy; Corporate Enforcement and Voluntary Self-Disclosure Policy (Mar. 10, 2026), available at https://www.justice.gov/dag/media/1430731/dl?inline.

New Factors Given “Great Weight” in Charging and Resolution Decisions

The Directive expands upon the Justice Manual’s non-exhaustive list of 11 factors to be considered when deciding how to treat a corporation during the lifecycle of a corporate investigation (often referred to as the Filip Factors).US Dep’t of Justice, Justice Manual § 9-28.300, available at https://www.justice.gov/jm/jm-9-28000-principles-federal-prosecution-business-organizations (hereinafter “JM”). The purpose of the additional detail is “to promote transparency and ensure Fraud Division prosecutors are appropriately and efficiently advancing [the Department’s] corporate enforcement mission.”Directive at 3.

This new guidance instructs NFED prosecutors to place “great weight” on 10 factors when deciding whether to bring charges and negotiating plea or other agreements.Id. at 4. These include:

1. Corporate management’s knowledge of, or involvement in, the fraud scheme
2. Efforts to conceal fraud from the government, or otherwise impede government oversight
3. Conduct that spans three years or more
4. Threats to national security, including military readiness
5. Conduct that causes substantial financial hardship to taxpayer-funded programs or government functions
6. Schemes that affect multiple taxpayer-funded programs or government functions
7. Conduct that affects three or more federal districts
8. Schemes that result in financial harm to 25 or more victims, or $25 million or more in losses
9. Conduct involving movement of US dollars outside of the United States to support foreign adversaries
10. Conduct involving immigration offenses

Many of these factors build on the first two Filip Factors, which require prosecutors to evaluate the “nature and seriousness of the offense, including the risk of harm to the public, and applicable policies and priorities”JM 9-28.300, 9-28.400. and “the complicity in, or the condoning of, the wrongdoing by individuals in corporate management.”JM 9-28.300, 9-28.500.

Indeed, Assistant Attorney General McDonald explained that corporate management’s knowledge of or involvement in the fraud scheme is “the top line that we would look at,” followed by “certain administration priorities that are important for us to tend well to, including if there is a fraud scheme that a corporation or corporate actor engages in that involves immigration offenses.”Phillip Bantz, “DOJ Outlines New Corporate Fraud Enforcement Priorities,” Law360 (Oct. 1, 2026), available at https://www.law360.com/aerospace/articles/2532588/doj-outlines-new-corporate-fraud-enforcement-priorities.

The Directive clarifies that these factors are non-exhaustive and that prosecutors may consider any other relevant factor and place appropriate weight on various factors when deciding a course of action.Directive at 4.

Procedural Changes to Centralize Oversight in the Corporate Enforcement Section

The Directive’s main procedural change is to place the NFED’s Corporate Enforcement Section at the center of every corporate fraud matter in the Division.Id. at 2-3. The Directive instructs prosecutors across the NFED to work closely with the Corporate Enforcement Section “at all phases of corporate investigations, from case intake through completion of any corporate resolution or litigation.” The Directive sets forth several mechanisms for closer cooperation with the Corporate Enforcement Section:

• Timely notification. Within seven days of the Directive, prosecutors must report all ongoing corporate investigations to the Corporate Enforcement Section chief. Going forward, the Corporate Enforcement Section must be notified promptly about new corporate investigations and major developments in ongoing corporate cases, and the section will join matters as needed so that cases are properly staffed and follow DOJ policy.
• Oversight of resolutions. The Corporate Enforcement Section will have “primary responsibility” for evaluating whether companies comply with the terms of corporate criminal resolutions. This includes reviewing efforts to build or improve compliance programs, confirming that required disclosures are made, and handling other issues during a non-prosecution or deferred prosecution agreement’s term. According to the Directive, this assignment of responsibility to the Corporate Enforcement Section will free up prosecutors to bring more cases and allow resolution compliance to be reviewed consistently across the Division.

This framework is consistent with the practice in the Criminal Division’s White Collar and Corporate Enforcement Section, where compliance matters are closely coordinated with that section’s Corporate Enforcement and Compliance Unit.

Encouraging Self-Disclosure and Whistleblowers (Including by Participants)

Finally, the Directive instructs the NFED leadership, in coordination with law enforcement, to design and implement policies and programs to incentivize whistleblowers to report fraud. Details of the forthcoming whistleblower programs have not yet been announced.

Notably, the Directive calls out that DOJ has historically relied on whistleblowers “even when they share culpability for the misconduct” and adds that “the Division’s policies must encourage and protect the disclosure of information by whistleblowers, including by those who participated in the criminal conduct.”

Conceptually, this could result in a whistleblower program that is friendlier to culpable actors as compared to the Criminal Division’s whistleblower policy (which covers several areas of the law now under the purview of the NFED). Under the Criminal Division Policy, an “individual is not eligible for payment if they meaningfully participated in the criminal activity, including by directing, planning, initiating, or knowingly profiting from that criminal activity.”Department of Justice Corporate Whistleblower Awards Pilot Program (July 30, 2026), at 11, available at https://www.justice.gov/criminal/media/1454776/dl?inline. The Criminal Division only allows eligibility for an award, at the Department’s discretion, if the reporting person’s role could be described as “plainly among the least culpable of those involved in the conduct of a group.”Id. It is yet to be seen whether the Division will take a similar (or more favorable) approach to whistleblowers who participated in the misconduct.

Reminder Regarding Division’s Proactive Data Analytics Efforts

Although the Directive does not provide significant detail, it includes a reminder that “the Fraud Division is proactively generating leads and opening new individual and corporate fraud investigations at a rapid pace,” including by leveraging data analytics through the National Fraud Detection Center and other partner components.Directive at 4.

Key Takeaways

• Understand that centralized oversight may increase compliance program expectations. Assigning a dedicated team to review compliance programs and resolution commitments may ultimately lead to heightened compliance program expectations. Following the Directive, the Corporate Enforcement Section will now play a centralized role in all matters, which will allow the section to bring (and continue to develop) a sophisticated understanding of corporate structures, compliance technologies, and what best practices and the art of the possible looks like. Companies should be prepared to defend their program to a team that offers this specialized expertise and perspective.
• Revisit risk assessment against the priority areas. Companies may want to use the Directive as a reason to revisit their risk assessment exercise and identify where their business may face heightened enforcement exposure to healthcare fraud, government contracting, and import or trade-sensitive issues. To the extent new or heightened residual risks are identified, companies can explore ways to dedicate or repurpose additional compliance resources to mitigate those risks.
• Incorporate the aggravating factors into investigations frameworks. Management involvement, multi-year schemes, conduct across several districts, and losses of $25 million or more are concrete thresholds that will shape how the Division treats a matter. Additionally, prosecutors will strongly consider connections to national security, defense readiness, and immigration-related offenses. Companies should ensure that their internal investigations and escalation procedures are designed to spot these factors early and factor them into how matters are staffed, resourced, and evaluated.
• Evaluate self-disclosure thoughtfully and promptly. In many ways, the Directive is simply the latest step in DOJ’s rapid build-out of the NFED and its focus on corporate fraud tied to taxpayer funds and administration priorities. It is evident from the Directive, combined with other announcements and updates from DOJ, that the administration is highly focused on enforcement in the priority areas set out in the Directive. At the same time, the Directive is introducing whistleblower incentives that may even reach people who took part in the misconduct, and the Directive suggests that DOJ’s data-driven lead generation is expanding. Both factors could increase the chance that DOJ learns of misconduct. Voluntary disclosure considerations are always complex and nuanced, and companies should take the Directive and related developments into consideration as part of that calculus.
• Deploy data analytics to detect and prevent fraud. The Directive’s reminder about the Division’s proactive (and collaborative) data analytics efforts should remind companies about the importance of using advanced technologies (including data analytics and, where appropriate, artificial intelligence) to detect and prevent fraud early and, ideally, before the Division identifies the issues.

Latham & Watkins will continue to monitor the NFED’s corporate enforcement activity and provide updates as the Corporate Enforcement Section and the new whistleblower programs develop. For more information, contact our White Collar Defense & Investigations Practice.