On Oct. 1, 2026, Colin M. McDonald, assistant attorney general for the U.S. Department of Justice’s National Fraud Enforcement Division (Fraud Division or Division), issued a memorandum titled “Directive 26-12: Corporate Enforcement in the Fight Against Fraud” (the Memorandum or the “Directive”), outlining the Division’s approach to investigating and prosecuting corporate misconduct. The Memorandum identifies priority areas for fraud investigations, directs prosecutors to give “great weight” to specified factors when determining corporate resolutions, and assigns a central role to the Division’s Corporate Enforcement Section (CES) throughout the lifecycle of corporate matters.
The Directive combines an aggressive enforcement posture with an express commitment to protect legitimate businesses and credit companies that disclose misconduct, cooperate, and remediate. For companies in the healthcare, government contracting, tax, and trade sectors, the Directive provides guidance on how the Fraud Division intends to select cases, evaluate corporate culpability, and oversee compliance following a resolution.
Background
DOJ issued the Memorandum amid expansion of the Fraud Division’s role in corporate enforcement. The Division was created in April 2026, and an August 2026 restructuring memorandum outlined plans to move approximately 500 attorneys and staff into the Division from other DOJ components and U.S. Attorneys’ Offices.
The Memorandum begins by discussing DOJ’s longstanding practice of prosecuting companies for fraud committed by employees, particularly where wrongdoing is “serious and pervasive” and the company’s compliance policies, internal controls, or history of misconduct indicate that it caused or encouraged the offense. At the same time, the Memorandum cautions that prosecutors must “firmly guard against overbroad corporate enforcement” that interferes with legitimate business operations. Accordingly, the Memorandum directs prosecutors to follow the Principles of Federal Prosecution of Business Organizations and the Department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP).
Its provisions apply to Fraud Division matters, and expressly exclude cases assigned to a district fraud counsel by a U.S. Attorney’s Office that are not also supervised by the Fraud Division. CES may nevertheless assist U.S. Attorneys’ Offices with fraud matters where helpful to DOJ’s overall mission.1
Priorities for Corporate Investigations
Division prosecutors are directed to prioritize four categories of fraud schemes when opening and conducting corporate investigations:
- Healthcare industry schemes, including healthcare fraud, distribution of controlled substances, and violations of the Federal Food, Drug, and Cosmetic Act;
- Schemes involving the public trust or financial integrity of Americans and markets related to procurement, government contracts, and other government functions;
- Schemes involving significant evasion of internal or external revenue; and
- Schemes involving tariff evasion, importation of goods or services, or forced labor.2
Separate from the above-referenced investigative priorities, the Memorandum sets forth 10 factors on which prosecutors “must place great weight” when deciding whether to bring charges and negotiating plea or other agreements:
- Corporate management’s knowledge of or involvement in the fraud scheme;
- Efforts to conceal fraud from government agencies or auditors, or otherwise impede or obstruct a government function or oversight;
- Conduct furthering the scheme that lasts three years or more;
- Actions threatening the safety or security of Americans, including military readiness;
- Conduct causing substantial financial hardship to a taxpayer-funded program or government function;
- Conduct affecting multiple taxpayer-funded programs or government functions;
- Conduct affecting three or more federal districts;
- Conduct resulting in financial harm to 25 or more victims or $25 million or more in loss;
- Conduct involving the exfiltration of American dollars to support foreign adversaries; and
- Conduct involving immigration offenses.
Critically, the Memorandum describes these factors as “non-exhaustive” and permits prosecutors to consider other relevant circumstances consistent with the Justice Manual. It also reiterates that prosecutors must follow the CEP “[i]n all circumstances.” Thus, the specified duration, geographic reach, victim count, and loss amounts may be understood as considerations informing prosecutorial discretion. They do not establish minimum requirements for a corporate prosecution, nor does the presence of a listed factor automatically resolve whether charges should be brought.3
The Corporate Enforcement Section
The Memorandum also formalizes the role of CES, which McDonald announced earlier this year. Division prosecutors must work closely with CES at all phases of corporate investigations, from case intake through resolution or litigation. CES is expected to assist with counseling, litigation, and negotiations across the Division’s fraud portfolio.
As an initial step, prosecutors must report ongoing corporate investigations to the CES chief within seven days of the Directive’s issuance. They must also promptly notify CES of new corporate investigations and major developments in existing matters. CES will participate as necessary and appropriate to ensure adequate resources and compliance with DOJ’s corporate enforcement policies.4
CES’s responsibilities extend beyond the resolution itself. It will have primary responsibility for evaluating a company’s compliance with the terms of any corporate criminal resolution, including the implementation or enhancement of compliance programs, reporting under disclosure obligations, and other issues arising during the agreement’s term. According to the Memorandum, this allocation of responsibility is intended to promote consistent assessments of corporate compliance and free prosecutors in other sections to pursue additional individual and corporate cases.5
Disclosure of Misconduct and Whistleblower Incentives
The Memorandum’s final section addresses how the Fraud Division intends to identify misconduct. The Memorandum states that additional resources, technology, and data analytics through the National Fraud Detection Center and partner components are enabling the Division to generate leads and open investigations “at a rapid pace.” The Memorandum also emphasizes the value of information provided by individuals and companies, including those who may share culpability for the misconduct.
To that end, the Memorandum directs Division leadership, in consultation with law enforcement partners, to design and implement policies and programs that incentivize whistleblowers to provide credible information concerning fraud. Those initiatives are intended to uncover criminal conduct, strengthen investigations, prevent losses, and address emerging threats. The Memorandum also calls for public transparency regarding the policies and programs to the extent possible.6
Implications
The Memorandum provides companies and their counsel with a helpful framework for assessing how the Fraud Division may approach corporate misconduct. DOJ’s focus on management involvement, concealment, duration, and the reach of a scheme suggests that an effective internal investigation might examine how misconduct developed and persisted within the organization. Determining what management knew, whether information was withheld from auditors or government agencies, and whether the conduct affected additional programs or locations may be particularly important to evaluating exposure and presenting the company’s position to prosecutors. Further, the requirement that prosecutors give “great weight” to the above-listed factors may make those issues central to resolution discussions, while the express preservation of the CEP leaves disclosure, cooperation, and remediation relevant to the outcome. A company confronting serious allegations might prepare to address both the factors that may weigh in favor of prosecution and the steps it has taken to identify, stop, and remediate the misconduct.
Finally, companies negotiating corporate resolutions should consider how they will demonstrate compliance throughout the agreement’s term. The CES’s continuing role suggests that evidence of implemented controls, completed remediation, and compliance with reporting obligations may receive sustained attention after a matter is resolved. Companies should account for those obligations when evaluating proposed resolution terms and assigning responsibility for their implementation. In sum, the Memorandum signals a coordinated approach to corporate fraud enforcement, with particular attention to taxpayer funds and conduct implicating national security, trade, and immigration concerns. How prosecutors balance those priorities with the Directive’s commitments to proportionality and giving credit for responsible corporate conduct may become clearer as the Fraud Division applies the guidance in individual cases.
1 Memorandum at 1–2, 3 n.2; see also Justice Manual § 9-28.000.
2 Memorandum at 3–4.
3 Id. at 4 & n.3 (citing Justice Manual § 9-28.300).
4 Id. at 2–3.
5 Id. at 3.
6 Id. at 4–5.