DOJ’s New Fraud Division Issues Plan to Rapidly Grow and to Focus on Five Priority Areas

On August 13, 2026, Assistant Attorney General for the National Fraud Enforcement Division, Colin M. McDonald, announced a multi-part plan to prioritize combatting certain categories of fraud in the United States in his memorandum titled “The Fraud Division's Enforcement Priorities” (hereinafter, the “Memorandum”). Attorney General Blanche previously announced the creation of the National Fraud Enforcement Division (the “Division”) in April of this year. Since that announcement, however, there has been limited guidance on the implementation of programs to effectuate the goals of the new Division. The rule establishing the Division is scheduled to be published on August 18, 2026.

McDonald’s Memorandum signals a significant change in approach to federal fraud enforcement under the current administration and provides the clearest roadmap yet on how the Division intends to reorganize and deploy its expanding resources.

Proposed Areas for Growth and Focus

The Memorandum outlines the Division’s two-part framework for addressing fraud in the coming years. The Division will focus on (1) leveraging resources to cultivate attorney growth and support, and (2) addressing specific areas of fraud that impact vulnerable Americans (including children, the elderly, and the sick or disabled) and threaten government programs.

I. DOJ Intends to Grow the Division Rapidly Until 2028

Since its creation earlier this year, the Division has focused on assembling staff and increasing its visibility. In order to continue to grow and extend its influence, the Division will implement the following changes to its structure and staffing:

1. Reorganization and Specialized Litigation Sections: The Division will include multiple specialized sections, including a Health Care Fraud Section, Public Trust and Financial Integrity Section, Tax Section, Global Trade & Commerce Enforcement Section, and others. The Memorandum attached a new organizational chart including those specialized sections. The new structure is purportedly designed to reduce “excessive bureaucratic oversight” and create a Division that is “lean, flat, and agile.”
2. Support Functions: Division prosecutors will be supported by a broad array of specialized resources, including asset recovery attorneys, investigators, appellate counsel, a dedicated privilege review team, corporate enforcement experts, automated litigation support, a cross-disciplinary team of data scientists, and cutting-edge technology and resources.
3. Robust Training Initiatives: New attorneys will begin in a National Enforcement Section, where they will prosecute cases across the Division’s full portfolio, supported by a “task force incubation program” designed to develop emerging leaders.

2. Five Key Areas of Prosecution

McDonald stated an intention to address complex fraud schemes and identified five key areas of prioritization: (1) public trust and financial integrity; (2) health care; (3) internal revenue; (4) global trade and commerce; and (5) corporate misconduct.

1. Public Trust and Financial Integrity: McDonald identifies procurement fraud, including defective pricing, bid rigging, self-dealing, bribery, product substitution, and billing fraud, as both a critical priority and matter of national security. The Division will also prioritize investigations into the exploitation of government programs—including student loan, child care, veterans’ benefits, nutritional supplements, disaster relief and small business programs—with what appears to be a particular emphasis on foreign national targets.
2. Health Care: The Memorandum further identifies health care fraud as a major priority. Special areas of focus include telemedicine fraud; Medicare and Medicaid fraud; controlled substance diversion, including illegally prescribing and dispensing opioids; home health and hospice schemes; and deceptive marketing and financial crimes related to healthcare.
3. Internal Revenue: The Memorandum identifies several categories of targets of criminal tax enforcement, including individuals and preparers of individual returns who make false statements on tax returns and the promoters of illegal tax schemes.
4. Global Trade and Commerce: In concert with the cross-agency Trade Fraud Task Force, the Division will focus on transshipment schemes, country-of-origin fraud, undervaluation of imported goods designed to evade duties, sanctions evasion, and foreign forced labor schemes.
5. Corporate Misconduct: The Memorandum closes its priorities list with a brief reference to anti-fraud corporate enforcement, noting that “the Department has long prioritized prosecuting corporate misconduct, and the Fraud Division will treat such wrongdoing no differently.”

New Rule Formally Establishes the Division and Reallocates Authority from the Criminal Division

On August 18, 2026, a final rule formally establishing the Division is scheduled to be published in the Federal Register. That rule, effective August 24, 2026, assigns the Division authority over criminal proceedings involving topics discussed above and strips the Criminal Division (“CRM”) of exclusive authority over these areas—specifically, carving out tax frauds and health plan fraud from CRM’s general criminal fraud assignment, removing CRM’s exclusive authority over controlled substances litigation, and removing CRM’s assignment of internal revenue law prosecutions entirely.

Notably, the rule also includes flexibility provisions, which allow the Division to prosecute any case or category of cases assigned by the Attorney General or Deputy Attorney General, or by agreement with another Assistant Attorney General, giving the Division potentially broad reach beyond its enumerated areas of focus.

Next Steps and Client Considerations

The Memorandum signals a potential shift in federal fraud enforcement focus. Government contractors and entities receiving federal funds should consider reviewing existing compliance programs and internal controls around pricing, billing, or program eligibility determinations for robustness. Companies with international supply chains and trade exposure should evaluate their customs and trade compliance frameworks in light of the Division’s focus on transshipment, valuation, and forced labor violations. Healthcare organizations—particularly those operating in the Division’s specific areas of focus (telemedicine, hospice care, and prescribing and dispensing controlled substances) should proactively review their billing and marketing practices. Finally, the Division’s emphasis on technological innovation suggests that companies that employ AI, automated decision-making, or algorithmic processes should assess whether those tools could inadvertently facilitate fraudulent billing, misrepresentation, or regulatory non-compliance.

For questions or further guidance on how these enforcement priorities may affect your business, please contact Arun G. Rao, Hiral Mehta, Glen Kopp, Kelly Kramer, Margaret Vander Woude, Rose A. Lyn, or Ravi Shah.