Summary
On October 1, 2026, Assistant Attorney General Colin M. McDonald of the Department of Justice (DOJ) National Fraud Enforcement Division issued Directive 26-12 on corporate enforcement. The directive identifies four priority areas and instructs prosecutors to give “great weight” to a non-exhaustive list of factors in determining whether to bring charges and in negotiating plea or other agreements. It also directs prosecutors to follow and implement the Department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP) and describes the role of the Corporate Enforcement Section.
The Upshot
Though the directive is consistent with current DOJ policy, several provisions merit attention:
- Within seven days of the directive’s issuance, Fraud Division prosecutors must report any ongoing corporate investigations to the Chief of the Corporate Enforcement Section. The Section must also be promptly notified of new corporate investigations and significant developments in ongoing corporate cases, and has primary responsibility for evaluating compliance with corporate criminal resolutions.
- Priority areas include health care fraud, including distribution of controlled substances and violations of the Federal Food, Drug, and Cosmetic Act; fraud schemes involving public trust or financial integrity related to procurement, government contracts, and other government functions; significant evasion of internal or external revenue; and fraud schemes involving tariff evasion, importation of goods or services, or forced labor.
- Prosecutors must place “great weight” on a non-exhaustive list of factors when determining whether to bring charges and in negotiating plea or other agreements, including management knowledge or involvement, concealment or obstruction, duration, threats to safety or security, impact on taxpayer-funded programs or government functions, geographic scope, victim or loss thresholds, exfiltration of American dollars to support foreign adversaries, and immigration offenses.
- The directive instructs Division leadership to design and implement policies and programs to incentivize whistleblowers to bring forward credible information about fraud, including whistleblowers who participated in the criminal conduct.
The Bottom Line
The directive does not materially alter the DOJ’s approach to corporate and white collar enforcement. It does, however, underscore a focus on fraud in which the government is the victim, framing the Division’s mission around fraud “against the United States and American taxpayer dollars.” Schemes in which companies themselves are the victims–such as trade secrets or embezzlement–are not excluded, but they are not among the directive’s enumerated priorities. The central role of a dedicated Corporate Enforcement Section within a well-resourced Fraud Division confirms that corporate fraud remains an administration priority, and enforcement activity is likely to increase. Companies operating in the priority sectors should anticipate heightened scrutiny and be prepared to review their compliance programs and procedures for assessing potential misconduct, disclosure, cooperation, and remediation, with the advice of counsel.
A Reaffirmation of Existing Policy
The directive states that the Fraud Division will “zealously prosecute corporate actors that defraud taxpayers and the United States of America,” while it will “firmly guard against overbroad corporate enforcement” and avoid interfering with “legitimate business operations.”
Prosecutors are directed to follow the Principles of Federal Prosecution of Business Organizations and the Department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP). Under the CEP, the DOJ will decline to prosecute companies that voluntarily self-disclose, fully cooperate, timely remediate, and have no aggravating circumstances, though they must still pay disgorgement and restitution. The DOJ has already put these incentives into practice, issuing its first CEP declination to a health care company and applying the SDNY’s self-disclosure policy in recent matters.
A Central Role for the Corporate Enforcement Section
The Corporate Enforcement Section, created earlier this year, has a central role in Fraud Division corporate matters. Within seven days of the directive’s issuance, Fraud Division prosecutors must report any ongoing corporate investigations to the Chief of the Corporate Enforcement Section. The Section must also be promptly notified of new corporate investigations and significant developments in ongoing cases, will participate as necessary, and will take the lead in monitoring compliance with corporate criminal resolutions. According to the DOJ, this allocation of responsibility will “free up resources in the prosecuting sections to pursue additional individual and corporate cases.”
Priority Areas and “Great Weight” Factors
The directive identifies four priority areas for corporate investigations:
- Health care, including health care fraud, distribution of controlled substances, and Federal Food, Drug, and Cosmetic Act violations.
- Procurement, government contracts, and threats to public trust or financial integrity.
- Significant evasion of “internal or external revenue.”
- Tariff evasion, importation of goods or services, and forced labor.
Prosecutors must give “great weight” to a non-exhaustive list of factors in determining whether to bring charges and in negotiating plea or other agreements, including management’s knowledge of or involvement in the scheme, concealment from government agencies or auditors, conduct lasting three or more years, conduct affecting three or more federal districts, financial harm to at least 25 victims or $25 million in losses, and conduct involving immigration offenses.
Data Analytics and Whistleblowers
The directive notes that, through the National Fraud Detection Center and data analytics, the Fraud Division is “proactively generating leads and opening new individual and corporate fraud investigations at a rapid pace.”
The directive further instructs Division leadership, in consultation with law enforcement partners, to design programs that “appropriately incentivize whistleblowers to bring forward credible information pertaining to fraud,” including those “who participated in the criminal conduct.” These efforts build on existing initiatives, including the DOJ’s Corporate Whistleblower Awards Pilot Program and whistleblower non-prosecution pilot programs in the Southern and Eastern Districts of New York.
Practical Considerations
Companies, particularly those in the directive’s priority sectors, should consider the following:
- Exposure Evaluation: Assess exposure to the directive’s priority areas and “great weight” factors.
- Early Internal Assessment: Companies should quickly assess allegations of misconduct, with the assistance of counsel, to determine whether disclosure is warranted before the DOJ learns of the conduct through other means.
Ballard Spahr’s White Collar Defense and Investigations Group has robust experience advising public and private sector clients on navigating changing DOJ priorities, as well as responding to governmental requests and investigations and civil enforcement proceedings.
We are currently advising clients on a host of these topics. Please contact us if we can assist you with advice and counsel regarding such matters, or in responding to active inquiries, investigations, or proceedings.
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