TheCorporateCounsel.net

The DOJ’s National Fraud Enforcement Division – which was created earlier this year – is getting clearer and clearer about its priorities and approaches. Last week, Colin McDonald, who leads “N-FED,” issued Directive 26-12 – “Corporate Enforcement in the Fight Against Fraud” – which outlines charging & resolution factors for all Fraud Division personnel to consider, investigative priorities, and principles.

The directives supplement the department-wide Corporate Enforcement Policy that the DOJ published back in March. This Sullivan & Cromwell memo discusses what this latest information means for companies:

The Directive further sharpens the Fraud Division’s focus on health care and government procurement fraud, signaling heightened scrutiny for health care companies and government contractors. Its emphasis on tax and trade fraud has broader implications for companies across industries. In particular, the integration of criminal tax enforcement into the expanding Fraud Division, together with the Directive’s prioritization of corporate tax misconduct, signals renewed attention to corporate tax fraud backed by greater prosecutorial resources and investigative capabilities. This focus also may further sharpen the division of labor between the new Fraud Division’s priorities and those of the Criminal Division’s White Collar and Corporate Enforcement Section.

As discussed in our August 14, 2026 client memorandum, the Fraud Division is expanding its use of data analytics and interagency coordination to identify potential misconduct. Together with its efforts to encourage whistleblowers, these capabilities increase the prospect that prosecutors will detect misconduct independently. Companies should therefore consider internal data review and stress testing and, where warranted, internal investigation and assessment of potential self-disclosure.

The Directive pairs these enforcement efforts with centralized review of cooperation, remediation, and compliance by the Corporate Enforcement Section. Companies reaching resolutions with the Fraud Division should therefore expect negotiated compliance measures to remain a focus of specialist review throughout the agreement’s term.

Finally, the Directive builds on the CEP by identifying enforcement priorities and factors that prosecutors must give particular weight in charging and resolution decisions. The CEP’s benefits for self-disclosure, cooperation, and remediation remain available where its requirements are met. Although the Directive’s factors may inform prosecutors’ assessment of aggravating circumstances, no listed factor automatically disqualifies a company from CEP benefits. Companies considering self-disclosure should therefore assess both their eligibility under the CEP and how their conduct measures against the Directive’s factors.

Members can visit our “White Collar” Practice Area for additional resources on this directive and other DOJ updates, including early returns on self-reporting under the Corporate Enforcement Policy.

– Liz Dunshee