News

WHW Alert: DOJ Fraud Division Issues Directive Addressing
Corporate Enforcement Priorities and Signaling an Aggressive “All-Tools” Approach

By: Sean Haran, Jeffrey Udell, Ronald White, Barry Rashkover, and Ivy Yao

On October 1, 2026, Assistant Attorney General Colin M. McDonald—head of the National Fraud Enforcement Division (the “Fraud Division”) of the U.S. Department of Justice (“DOJ”)—issued “Directive 26-12: Corporate Enforcement in the Fight Against Fraud” (the “Directive”), setting forth the Fraud Division’s corporate enforcement priorities, internal structure, charging considerations, and whistleblower policies.

Below are our observations on what the Directive signals for corporations, compliance programs, and the broader white-collar enforcement landscape.

Summary of the Directive

Since establishment of the Fraud Division in April 2026, corporate enforcement has been centralized within its Corporate Enforcement Section, which supports, counsels, and litigates corporate matters across the Fraud Division’s portfolio.  The Directive commands Fraud Division prosecutors to report all currently ongoing corporate investigations to the Chief of the Section within seven days of the issuance of the Directive, and to thereafter promptly notify the Section of any new corporate investigations and major developments in ongoing corporate cases.

The Directive identifies four priority areas for heightened focus: (1) healthcare fraud (including controlled-substance distribution and Federal Food, Drug, and Cosmetic Act (“FDCA”) violations); (2) fraud involving the public trust, financial integrity, and government contracts; (3) significant tax evasion; and (4) tariff evasion, importation fraud, and forced labor.

Further, the Directive identifies the following ten aggravating factors that will drive charging and resolution decisions, directing prosecutors to give them “great weight” in determining whether to bring charges and in negotiating plea or other agreements: (1) management knowledge of the fraud, (2) efforts to conceal misconduct, (3) schemes lasting three or more years, (4) conduct threatening national security or military readiness, (5) substantial financial harm to government programs, (6) multi-government program impact, (7) multi-federal district impact, (8) victim counts of 25 or more or losses of $25 million or more, (9) exfiltration of funds to foreign adversaries, and (10) immigration offenses.

The Directive also signals that whistleblower incentives will be expanded, commanding Division leadership to design and implement new policies and programs to incentivize whistleblowers to disclose fraud.

Finally, in undertaking all of the above, the Directive notes that the Principles of Federal Prosecution of Business Organizations and the Department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy (the “CEP”) remain the governing framework.  The Directive reinforced that self-disclosure, cooperation, and remediation will continue to be credited where warranted.

Discussion and Key Takeaways

The Directive reflects an effort by the Fraud Division to consolidate corporate enforcement expertise, identify its priorities, and signal that corporate fraud will be pursued aggressively and consistently across the Division’s portfolio.

From a DOJ operational perspective, by requiring Fraud Division prosecutors to consult the Corporate Enforcement Section throughout the lifecycle of every corporate matter, including evaluation of corporate compliance with the terms of any criminal resolution, the Directive aims to centralize decision-making in a unit staffed by specialists.  This would seem to portend a more consistent evaluation of corporate conduct and compliance programs across all cases handled by the Fraud Division.

The Directive’s substantive guidance is equally significant.  By identifying four priority areas—each of which primarily concerns fraud against the government, rather than private parties—the Division is signaling where its investigative resources and corporate resolutions will be concentrated.  Indeed, the Directive asserts that the DOJ will “zealously prosecute corporate actors that defraud taxpayers and the United States of America.”  Companies operating in government-facing sectors should expect heightened scrutiny, more frequent inquiries, and a lower threshold for opening corporate investigations.  Companies should be aware, however, that there is no indication that U.S. Attorney’s Offices that have traditionally focused on securities fraud—such as the Southern and Eastern Districts of New York—will lessen their focus on fraud against private parties.  Indeed, the Directive expressly states it does not extend to cases assigned to a District Fraud Counsel by a U.S. Attorney’s Office that are not supervised by the Fraud Division.

The ten aggravating factors listed in the Directive are particularly important for companies and counsel evaluating exposure.  These factors supplement rather than supplant the existing factors listed in the Principles of Federal Prosecution of Business Organizations.  See Justice Manual § 9-28.000.  It is worth noting, however, that the Directive introduces concrete quantitative thresholds (losses of $25 million or more, 25 or more victims, three or more federal districts, schemes lasting three years or more), providing companies with a workable framework for self-assessment.  Consistent with the focus on the four priority areas discussed above, the factors are also weighted toward national-security and large-scale fraud concerns (military readiness, substantial harm to government programs, multi-program impact, foreign-adversary exfiltration, and immigration offenses) and signal an enforcement posture oriented toward threats to U.S. interests rather than routine corporate malfeasance.

The Directive states that these factors are non-exhaustive and that prosecutors retain discretion to consider other relevant factors consistent with the Justice Manual—meaning that the listed factors should be read as a floor rather than a ceiling on aggravating considerations.

Additionally, the Directive signals that the Fraud Division intends to expand the whistleblowing channels through which corporate misconduct is surfaced and investigated.  Companies should anticipate that internal reporting mechanisms, hotlines, and compliance investigations will face increased pressure to produce credible, actionable disclosures—or risk having those disclosures made externally first.

Finally, companies that identify potential issues must evaluate promptly whether voluntary self-disclosure is available and appropriate under the CEP, particularly where the aggravating factors identified in the Directive may otherwise weigh heavily in charging and resolution decisions.

Conclusion

Directive 26-12 is a clear signal that the Fraud Division intends to pursue corporate fraud in its identified priority areas with greater centralization and a broader whistleblower apparatus.  Companies in the four priority sectors—healthcare, government contracting, tax-sensitive industries, and import/trade—should treat the Directive as a call to reassess compliance programs, internal-investigation protocols, and self-disclosure readiness.  More broadly, any company whose operations implicate the ten aggravating factors should evaluate whether existing controls, training, and reporting mechanisms are calibrated to the Division’s stated enforcement posture.

* This Client Alert is provided for informational purposes only and does not constitute legal advice.  It should not be construed or relied on as legal advice, or to create a lawyer-client relationship.  Readers should not act upon this information without seeking advice from professional advisers.