| Footnotes for this article are available at the end of this page. |
On February 5, 2025, Attorney General Bondi issued a Memorandum, “Ending Illegal DEI and DEIA Discrimination and Preferences,” which was designed to implement President Trump’s Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”1 As part of this effort, Attorney General Bondi instructed the Department of Justice’s Civil Rights Division to “investigate, eliminate and penalize illegal DEI and DEIA preferences, mandates, polices, programs and activities in the private sector and in educational institutions that receive federal funds,” including by developing “[o]ther strategies to end illegal DEI and DEIA discrimination and preferences and to comply with all federal civil-rights laws.”
On May 19, 2025, building on these directives, Deputy Attorney General Blanche issued a Memorandum announcing the launch of the “Civil Rights Fraud Initiative,” to be co-led by the Civil Division’s Fraud Section and the Civil Rights Division. The initiative expands both the use and the scope of the False Claims Act (“FCA”), declaring that it is implicated when a federal contractor or recipient of federal funds knowingly violates civil rights laws and falsely certifies compliance with such laws. The Memorandum, which expressly targets employers and universities, also specifies the nature of the civil rights violations that may now implicate the FCA, including “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.” Thus, according to the Memorandum, federal contractors and funding recipients that maintain DEI programs, follow employment or admissions policies that take race or gender considerations into account, or “camouflage” such programs with “cosmetic changes that disguise their discriminatory nature” risk possible enforcement under the FCA. Equally, a university that receives federal funds may violate the FCA if 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.”
In addition to expanding the scope of the FCA to include alleged civil rights violations, the Memorandum requires the Civil and Civil Rights Divisions to engage with DOJ’s Criminal Division along with other executive agencies, including, inter alia, the Departments of Education, Health and Human Services, Housing and Urban Development, and Labor, and further instructs the DOJ to establish partnerships with state attorneys general and local law enforcement to share information and coordinate enforcement actions. Finally, Deputy Attorney General Blanche also “strongly” encouraged private whistleblowers or relators to file lawsuits and litigate FCA claims — and to share in the monetary recovery provided for in the Act.
The Expansion of the False Claims Act
The FCA, which was first enacted in 1863, imposes liability on persons and companies that defraud governmental programs. Since its inception, it has been used to recover funds that the government paid to contractors and service providers who failed to provide goods and services that conform to the government’s requirements for these goods and services. Liability under the FCA arises from the claim for payment that the contractor filed and the warranty or certification reflected in the claim that the products or services complied with the government’s requirements.
Historically, a violation under the FCA has involved a violation of the statutory and regulatory requirements that govern the contractual relationship between the government and the contractor or recipient of the funds. Violations of statutes or regulations that are not implicated by the contract — such as civil rights or employment law violations — have been addressed by the wide range of statutes enacted for such purposes, e.g., Title IV, Title VI, and Title IX of the Civil Rights Act.
The Civil Rights Fraud Initiative thus expands both the contractual relationship between the government and contractors/employers/universities, and the definition of what constitutes “fraud” under the FCA. The extension of FCA liability to DEI programs, campus conduct, and employment or admissions policies rooted in race or gender considerations represents a significant shift in enforcement, as well as a significant expansion of government authority and oversight. Federal funding recipients, especially in education, healthcare, housing, and employment programs, are now exposed to potential whistleblower suits and DOJ enforcement based not just on financial malfeasance but on alleged civil rights violations.
The risks and penalties under the FCA, as Deputy Attorney General Blanche pointedly noted in his Memorandum, are significant and may result in treble damages. Coupled with his open call for whistleblowers to report alleged violations and to file FCA complaints, the threat to contractors, universities, and other entities receiving federal funds is clear.
What Organizations Should Do Now
Whether the FCA actually allows for the expansion of liability outlined in the Memorandum will inevitably end up in the courts. Certainly, there will be questions — for example, whether the alleged illegal practices violated the civil rights laws; whether liability for the alleged illegal practices, such as those described in the Memorandum can be established; whether the alleged violations may be tied to a particular claim for payment; whether the alleged violations are even incorporated in, or are the subject of, an allegedly false claim; whether the alleged violations are material to the government’s decision to pay the claim; and, of course, whether the FCA may be used to enforce statutes beyond those that are implicated in the payment.
In the meantime, however, organizations that receive federal funds should take proactive steps to assess their exposure and review their compliance programs. While many institutions have worked in good faith to meet civil rights obligations and promote equity, the DOJ’s new initiative reflects a changed enforcement posture. To prepare, organizations should:
- Audit Certifications: Review all federal contract or grant certifications, particularly those asserting compliance with civil rights laws. Ensure policies and practices align with those certifications.
- Evaluate DEI and Equal Employment Opportunity Programs: Reassess DEI initiatives and employment practices to confirm that no policy could be construed as assigning benefits or burdens based on race, ethnicity, or gender. Consider recent court rulings and executive orders as part of this review.
- Enhance Compliance Training: Train HR and compliance staff on how civil rights obligations intersect with the newly expanded FCA exposure. Focus on good-faith implementation and documentation of nondiscriminatory practices.
- Consult Counsel Early: Involve legal counsel in reviewing high-risk policies and evaluating potential FCA exposure. Experienced FCA and employment counsel can help develop compliance strategies that account for DOJ’s evolving enforcement theories.
Final Thoughts
DOJ’s recently announced Civil Rights Fraud Initiative represents a significant escalation in how it enforces both civil rights statutes and the False Claims Act. For many organizations, particularly educational institutions, healthcare providers, nonprofits, and federal contractors, this initiative expands the traditional boundaries of FCA risk. Where enforcement was once focused primarily on financial misrepresentations or regulatory noncompliance, DOJ has now clarified that alleged violations of civil rights laws, especially when tied to racial, ethnic, or gender-based policies, will also be treated as potential fraud on the federal government.
The message is clear: any organization that receives federal funds must not only comply with traditional programmatic requirements but must also ensure that its policies do not conflict with recent Executive Branch guidance. This includes revisiting DEI and equal opportunity programs to ensure they do not result in de facto racial or gender preferences, even if those programs are well intentioned and/or were previously encouraged.
[1] 90 Fed. Reg. 8633 (January 21, 2025).