DOJ Announces its “Civil Rights Fraud Initiative” and Use of False Claims Act to Combat “Illegal DEI”

The federal False Claims Act (FCA) has been used since the Civil War to punish government contractors who submit false or fraudulent claims for payment to government agencies.  The typical FCA case involves a physician submitting false claims for reimbursement to Medicare or a defense contractor falsely certifying that it satisfied a certain quality metricm when it did not.

The FCA is one of the government’s most powerful fraud-fighting statutes – at least on the civil side — as it imposes treble (3x) damages and  penalties of up $28,619 per claim, which often turns matters involving relatively small actual damage amounts into 7- or even 8-figure judgments.  The FCA also contains powerful pre-litigation investigative tools called Civil Investigative Demands (CIDs), which allow the government to demand production of documents, interrogatory responses, and sworn deposition testimony, not only from anyone who is suspected of violating the FCA, but anyone who has relevant information about a potential violation.  The statute of limitations for the FCA is 6 years, but can be extended up to 10 years under certain circumstances; longer than the typical 5-year statute of limitations for federal criminal fraud offenses.

The FCA also contains qui tam provisions which allow private citizens to file whistleblower lawsuits in the name of the United States.  In return, such private whistleblowers – known as Relators – are entitled to between 15% and 30% of the government’s eventual recovery.

Under the Trump Administration, the DOJ is expanding its use of the FCA in ways that have not been previously attempted.  In February 2025, Attorney General Pam Bondi issued a memo calling for the end of “illegal DEI and DEIA discrimination and preferences” and instructing the DOJ’s Civil Rights Division to “investigate, eliminate, and penalize illegal DEI and DEIA preferences, mandates, policies, programs, and activities in the private sector and in educational institutions that receive federal funds.”  This came one month after President Trump issued Executive Order 14173, titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”  In that EO, President Trump instructed the head of each federal agency to include in every contract or grant award a term requiring compliance “with all applicable Federal anti-discrimination laws” and a term requiring the recipient to certify that “it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”  The EO expressly stated that compliance with federal anti-discrimination laws “is material to the government’s payment’s decision for purposes of [the FCA].” (materiality is one of the elements of an FCA cause of action).

Most recently, on May 19, 2025, Deputy Attorney General Todd Blanche issued a memo announcing the DOJ’s “Civil Rights Fraud Initiative.”  Blanche opens his memo by stating that one of the most effective ways to accomplish the DOJ’s objective of eliminating “illegal DEI” “is through vigorous enforcement of the False Claims Act against those who defraud the United States by taking its money while knowingly violating civil rights laws.”

Blanche’s memo goes on to give examples of when a university might violate the FCA:  “a university that accepts federal funds could violate the False Claims Act when it encourages antisemitism, refuses to protect Jewish students, allows men to intrude into women’s bathrooms, or requires women to compete against men in athletic competitions.  Colleges and universities cannot accept federal funds while discriminating against their students.”

Blanche’s memo also states that the FCA is implicated “whenever federal-funding recipients or contractors certify compliance with civil rights laws while knowingly engaging in racist preferences, mandates, policies, programs, and activities, including through diversity, equity, and inclusion (DEI) programs that assign benefits or burdens on race, ethnicity or national origin.”

Blanche says that the DOJ’s Civil Rights Fraud Initiative “will utilize the False Claims Act to investigate and, as appropriate, pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws.”  The Initiative will be co-led by the DOJ’s Civil Fraud and Civil Rights sections, each of which “will identify a team of attorneys to aggressively pursue this work together.”  In addition to the lawyers from “Main Justice” in Washington, D.C., Blanche’s memo directs each of the 93 U.S. Attorney’s Offices to “identify an Assistant United States Attorney to advance these efforts.”

The memo instructs all relevant sections to engage in “regular coordination meetings and share relevant information about potential violations” and also to coordinate with the DOJ’s criminal division, as well as various federal agencies including the Departments of Education, Health and Human Services, Housing and Urban Development, and Labor.  The memo also instructs the DOJ to “establish partnerships with state attorneys general and local law enforcement to share information and coordinate enforcement actions.”

Finally, the memo encourages private citizens who are aware of such violations to file whistleblower lawsuits under the FCA’s qui tam provisions or to report such information to the appropriate federal authorities.

Blanche’s memo is almost certain to result in a significant uptick in FCA enforcement actions related to DEI-type initiatives, including an increase in whistleblower lawsuits being filed against universities and other federal grant recipients under the FCA’s qui tam provisions.  We will monitor these developments and provide updates when they come.