Summary
On October 1, 2026, Colin M. McDonald, Assistant Attorney General of the National Fraud Enforcement Division (the “Fraud Division”) of the U.S. Department of Justice, issued Directive 26-12, titled “Corporate Enforcement in the Fight Against Fraud,” addressed to all Fraud Division personnel. The Directive establishes a framework for investigating and prosecuting corporate fraud within the Fraud Division, instructing prosecutors to take an “aggressive, all-tools approach” to “health care, government, tax, and trade fraud priorities.”
The Directive: (i) prioritizes health care, government, tax, and trade fraud; (ii) identifies 10 charging and resolution factors; (iii) centralizes oversight of corporate matters through the Corporate Enforcement Section; and (iv) directs the development of whistleblower incentives.
The Directive supplements, rather than replaces, the Department’s existing corporate enforcement framework. It expressly requires that “[i]n all circumstances, Fraud Division prosecutors shall also follow and implement the CEP,” referring to the Department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy (“CEP”) released on March 10, 2026.
Key Directives
The Directive addresses investigative priorities and charging considerations, coordination and oversight of corporate matters, and efforts to detect fraud and encourage disclosures.
Investigation Priorities. The Directive instructs prosecutors to prioritize four categories of fraud: (i) fraud schemes involving the health care industry, including health care fraud, distribution of controlled substances, and violations of the Federal Food, Drug, and Cosmetic Act; (ii) fraud schemes involving procurement, government contracts, and other government functions; (iii) fraud schemes involving significant evasion of internal or external revenue; and (iv) fraud schemes involving tariff evasion, importation of goods or services, or forced labor.
Principles of Corporate Enforcement. The Directive affirms DOJ’s long history of prosecuting companies for fraud committed by employees, “particularly when a company’s wrongdoing is serious and pervasive, and its compliance policies, internal controls, and history of misconduct, among other factors, establish that the company caused or encouraged the offense.” At the same time, the Directive recognizes that the Department “must protect law-abiding companies and appropriately credit those that demonstrate a willingness to disclose misconduct, cooperate, and remediate.” To preserve that balance, the Directive commits the Fraud Division to “firmly guard against overbroad corporate enforcement” and to distinguish among varying degrees of corporate misconduct to minimize interference with legitimate business operations. Consistent with those principles, the Directive instructs prosecutors to “follow the Department’s policies concerning corporate enforcement, including the Principles of Federal Prosecution of Business Organizations and the Department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP),” citing Justice Manual section 9-28.000.
Role of the Corporate Enforcement Section. As discussed in our August 14, 2026 client memorandum regarding the new Fraud Division’s structure and priorities, the Fraud Division’s August 13 announcement outlined the Corporate Enforcement Section’s role in applying DOJ’s corporate enforcement policies fairly and consistently. The Directive further defines the Corporate Enforcement Section’s remit, explaining that the Section “shall actively support our other sections, counseling, litigating, negotiating, and otherwise driving success.” Accordingly, the Directive instructs Division prosecutors 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 Corporate Enforcement Section “will also have primary responsibility for evaluating a company’s compliance with the terms of any corporate criminal resolution.” That work includes evaluating a company’s efforts “to implement or enhance its compliance program, ensuring adequate reporting under any disclosure obligations, and responding to other issues that may arise during the term of the agreement.” By centralizing this function, the Directive is intended to free prosecuting sections “to pursue additional individual and corporate cases.” These functions resemble those performed by the Criminal Division’s Corporate Enforcement and Compliance Unit, which advises prosecution teams on corporate resolutions and oversees post-resolution compliance.
The Directive includes an internal reporting requirement under which Fraud Division prosecutors must apprise the Corporate Enforcement Section of corporate matters. Within seven days of the Directive’s issuance, prosecutors “shall report any ongoing corporate investigations to the Chief of the Corporate Enforcement Section.” Going forward, the Section must be “promptly notified of any new corporate investigations, as well as major developments in ongoing corporate cases.”
Charging and Resolution Factors. The Directive enumerates ten factors on which personnel “must place great weight” when making charging and resolution decisions under Justice Manual section 9-28.300. They include:
- (i) knowledge of or involvement in the fraud scheme by corporate management;
- (ii) efforts to conceal fraud from government agencies or auditors or otherwise impede or obstruct a government function or oversight;
- (iii) conduct that furthers the scheme lasting three years or more;
- (iv) actions that threaten the safety or security of Americans, including military readiness;
- (v) conduct that causes substantial financial hardship to a taxpayer-funded program or government function;
- (vi) conduct that affects multiple taxpayer-funded programs or government functions;
- (vii) conduct that affects three federal districts or more;
- (viii) conduct that results in financial harm to twenty-five or more victims or $25 million or more in loss;
- (ix) conduct that involves the exfiltration of American dollars to support foreign adversaries; and (x) conduct that involves immigration offenses.
In the same October 1 interview, McDonald called management knowledge or involvement “the top line that we would look at” and said the list includes “certain administration priorities that are important for us.” The list is “non-exhaustive,” and a prosecutor “may consider any other relevant factor, consistent with the Justice Manual, and place appropriate weight on such factor.”
Whistleblower and Detection Initiatives. The Directive explains that the Fraud Division is “proactively generating leads and opening new individual and corporate fraud investigations at a rapid pace” by leveraging “an infusion of resources, state-of-the-art technology, and data analytics through the National Fraud Detection Center and partner components.” At the same time, Division policies “must encourage and protect the disclosure of information by whistleblowers, including by those who participated in the criminal conduct.” It directs Division leadership to “design and implement policies and programs that appropriately incentivize whistleblowers to bring forward credible information pertaining to fraud.”
Implications
The Directive further sharpens the Fraud Division’s focus on health care and government procurement fraud, signaling heightened scrutiny for health care companies and government contractors. Its emphasis on tax and trade fraud has broader implications for companies across industries. In particular, the integration of criminal tax enforcement into the expanding Fraud Division, together with the Directive’s prioritization of corporate tax misconduct, signals renewed attention to corporate tax fraud backed by greater prosecutorial resources and investigative capabilities. This focus also may further sharpen the division of labor between the new Fraud Division’s priorities and those of the Criminal Division’s White Collar and Corporate Enforcement Section.
As discussed in our August 14, 2026 client memorandum, the Fraud Division is expanding its use of data analytics and interagency coordination to identify potential misconduct. Together with its efforts to encourage whistleblowers, these capabilities increase the prospect that prosecutors will detect misconduct independently. Companies should therefore consider internal data review and stress testing and, where warranted, internal investigation and assessment of potential self-disclosure.
The Directive pairs these enforcement efforts with centralized review of cooperation, remediation, and compliance by the Corporate Enforcement Section. Companies reaching resolutions with the Fraud Division should therefore expect negotiated compliance measures to remain a focus of specialist review throughout the agreement’s term.
Finally, the Directive builds on the CEP by identifying enforcement priorities and factors that prosecutors must give particular weight in charging and resolution decisions. The CEP’s benefits for self-disclosure, cooperation, and remediation remain available where its requirements are met. Although the Directive’s factors may inform prosecutors’ assessment of aggravating circumstances, no listed factor automatically disqualifies a company from CEP benefits. Companies considering self-disclosure should therefore assess both their eligibility under the CEP and how their conduct measures against the Directive’s factors.