DOJ’s New Corporate Fraud Directive: 10 Red Lines, Culpable Whistleblowers and Data-Driven Targeting
On October 1, 2026, the Chief of DOJ’s National Fraud Enforcement Division issued Directive 26-12 (Directive) highlighting “an aggressive, all-tools approach to investigating and prosecuting” health care, government, tax and trade fraud.
Although not displacing existing policy, the Directive elevates the role of the Division’s Corporate Enforcement Section, created earlier this year. The Directive commands that Fraud Division prosecutors work closely with the Corporate Enforcement Section at all phases of corporate investigations. Accordingly, within seven days of the Directive, prosecutors were required to report all ongoing corporate investigations to the Section Chief, and the Section must be promptly notified of new corporate investigations and major developments going forward.
Four Investigative Priorities and Ten Weighted Charging Factors
The Directive instructs prosecutors to prioritize four categories of fraud schemes: health care fraud (including controlled substances distribution and FDCA violations); schemes affecting “the public trust or financial integrity of Americans and markets related to procurement, government contracts and other government functions”; significant evasion of internal or external revenue; and tariff evasion, import fraud and forced labor.
Prosecutors are to place “great weight” on ten specific factors when determining whether to bring criminal charges or negotiate plea resolutions. The list below is not exhaustive, and prosecutors remain free to consider other factors in deciding a course of action in a corporate case. That said, corporate counsel can audit their exposure directly against the following:
| # |
Factor
|
Operational Description |
| 1 | Management Involvement
|
Knowledge of or direct participation in the fraud scheme by corporate executives or leadership. |
| 2 | Active Concealment / Obstruction
|
Intentional efforts to hide fraud from government agencies or auditors, or obstructing government oversight. |
| 3 | Duration of Conduct
|
Scheme or fraudulent conduct that continues for 3 years or more. |
| 4 | National Security & Public Safety
|
Actions that threaten the safety or security of Americans, including impacts on military readiness. |
| 5 | Substantial Financial Hardship
|
Conduct causing severe financial hardship to a taxpayer-funded program or government function. |
| 6 | Multiple Program Impact
|
Fraudulent conduct that impacts multiple taxpayer-funded programs or government functions simultaneously. |
| 7 | Geographic Reach
|
Misconduct affecting 3 federal districts or more. |
| 8 | Financial Loss & Victim Scale
|
Fraud resulting in $25 million or more in loss OR harming 25 or more victims. |
| 9 | Foreign Adversary Exfiltration
|
Conduct involving the exfiltration of American dollars to support foreign adversaries. |
| 10 | Immigration Offenses
|
Misconduct that directly involves or furthers immigration offenses. |
Data Analytics and New Whistleblower Incentives
The Directive further notes that the Fraud Division, using “state-of-the-art technology, and data analytics through the National Fraud Detection Center,” is actively generating leads and opening corporate investigations “at a rapid pace.” Observing that the Fraud Division has historically been assisted by individuals and companies committed to doing the right thing and rooting out criminal fraud, DOJ is commanding Fraud Division leadership to design programs and policies “to uncover criminal conduct, strengthen ongoing investigations, help prevent fraud losses and enable the Department to effectively respond to both latent and emerging criminal fraud threats.” To facilitate achievement of that goal, DOJ looks to incentivize whistleblowers, including individuals who directly participated in the underlying criminal conduct, to disclose credible information related to fraud. In other words, this framework aims to illuminate latent and emerging threats, strengthen active investigations, and prevent ongoing losses by incentivizing early self-reporting from those with direct knowledge of corporate schemes.
What This Means for Corporate Accountability
As federal prosecutors begin deploying advanced analytical tools and launching new whistleblower programs, corporate boards and compliance executives must critically examine their internal auditing capability and reporting protocols to meet heightened scrutiny in DOJ’s priority fields, with a particular eye towards the ten explicit charging factors. As the Division’s ability to leverage technology to detect fraud indicators earlier increases, so too does the importance of swift privileged internal investigations and potential voluntary disclosures. Accordingly, it is imperative that companies become proactive, ensuring that matters of potential concern are identified early and raised to senior management promptly. Engaging experienced counsel is crucial to navigating this new aggressive enforcement posture.
If you have any questions about this directive or criminal and civil investigations related to government procurements or corporate transactions, please reach out to your Cohen Seglias contact or contact any member of the Government Contracting Group or White-Collar Defense and Internal Investigations Group.
