DOJ Fraud Division Directive 26-12: Implications For Corporate Fraud Enforcement

Key Takeaways

1. Directive 26-12 gives Fraud Division prosecutors a coordinated framework for corporate investigations. It also addresses resolution decisions and compliance monitoring.
2. The directive prioritizes four areas: healthcare; taxpayer fraud; and fraud affecting financial markets, government contracts, and tax and tariff evasion.
3. When recommending charges or resolutions, prosecutors must give “great weight” to ten aggravating factors. Those factors include management involvement, concealment, the length of the scheme, and the size of the loss.
4. The directive also reinforces DOJ’s use of data analytics through the National Fraud Detection Center and announces an intent to fashion a whistleblower incentive program.

What Directive 26-12 Requires of Fraud Division Prosecutors

On October 1, 2026, Assistant Attorney General Colin M. McDonald issued Directive 26-12, titled “Corporate Enforcement in the Fight Against Fraud.” It directs prosecutors in the National Fraud Enforcement Division (Fraud Division) to pursue healthcare, government, tax, and trade fraud using an “all-tools approach.” The directive also reminds prosecutors to give credit to companies that disclose misconduct, cooperate, and remediate.

The directive builds on the Principles of Federal Prosecution of Business Organizations and the Department of Justice (DOJ) issued Corporate Enforcement and Voluntary Self-Disclosure Policy. It gives Fraud Division prosecutors additional guidance on whether to open an investigation, whether to recommend charges, how to negotiate a resolution, and how to assess compliance with resolution terms. The directive also instructs prosecutors to guard against overbroad corporate enforcement that could interfere with legitimate business operations.

Role of the Corporate Enforcement Section (CES)

The directive also provides that the recently created Corporate Enforcement Section (CES) will coordinate corporate matters from intake through resolution or litigation. Prosecutors must report ongoing corporate investigations to the CES chief within seven days after the directive’s issuance. They must also notify CES promptly of new investigations and major developments.

What Are the Fraud Division’s Four Enforcement Priorities?

The directive identifies four enforcement priorities:

1. Healthcare fraud, including controlled-substance distribution and violations of the federal Food, Drug, and Cosmetic Act.
2. Fraud affecting public trust or the financial integrity of Americans and markets, including fraud in procurement, government contracts, and other government functions.
3. Fraud involving the significant evasion of internal or external revenue.
4. Tariff evasion, the importation of goods or services, or forced labor.

10 Aggravating Factors DOJ Will Weigh in Corporate Fraud Cases

When recommending an outcome in a corporate matter, Fraud Division personnel must give “great weight” to ten factors:

1. Corporate management’s knowledge of or involvement in the fraud scheme.
2. Efforts to conceal wrongdoing from government agencies or auditors, or to impede or obstruct a government function or oversight.
3. Schemes lasting three years or more.
4. Actions threatening the safety or security of Americans, including military readiness.
5. Conduct causing substantial financial hardship to a taxpayer-funded program or government function.
6. Impacts on multiple taxpayer-funded programs or government functions.
7. Conduct affecting three or more federal districts.
8. Financial harm to 25 or more victims or losses of $25 million or more.
9. The exfiltration of American dollars to support foreign adversaries.
10. Immigration offenses.

The factors are non-exhaustive. Prosecutors may consider other relevant facts consistent with the Justice Manual in determining whether and how to prosecute corporate fraud and must also apply the DOJ’s corporate-enforcement policies. McDonald has called management knowledge or involvement the “top line” factor, while the references to national security, immigration offenses, and the exfiltration of dollars to foreign adversaries reflect administration priorities.

How Directive 26-12 Will Change Corporate Fraud Enforcement

1. Centralized corporate oversight. The reporting and notice requirements will bring CES into Fraud Division matters earlier and promote coordination across cases.
2. Resolution monitoring. CES will have primary responsibility for assessing whether companies comply with their corporate criminal resolutions, including compliance-program implementation and reporting obligations. A company that settles should expect ongoing oversight and be prepared to show full compliance throughout the agreement term.
3. Data-driven detection. The National Fraud Detection Center and partner components are using data analytics, along with other resources and technology, to generate leads and open fraud investigations. That approach signals continued emphasis on proactive fraud detection.
4. Whistleblower incentives. The directive instructs Fraud Division leadership to design programs that incentivize whistleblowers to provide credible information, meaning that insider reports are likely to become an increasingly important source of enforcement leads.

Practical Implications for Companies Preparing for Directive 26-12

Companies in the priority areas should review the following controls and processes:

1. Assess management oversight. Review governance structures, escalation pathways, and supervisory controls. Management should receive timely information about compliance risks and potential issues, given that management knowledge or involvement is a heavily weighted factor.
2. Strengthen reporting and response protocols. Make sure concerns are identified, escalated, investigated, and remediated promptly. The process should support voluntary disclosure and early cooperation with government requests.
3. Review government-facing controls. Reassess controls for healthcare reimbursement, government programs and contracts, internal and external revenue, and tariff- and import-related activities.
4. Prepare for data-driven detection and insider reports. Preserve records and understand which operational data regulators may use to identify anomalies. DOJ is actively incentivizing whistleblowers. Companies should maintain credible internal reporting channels so that employees raise concerns internally first, giving the company an opportunity to investigate and, if appropriate, voluntarily disclose.