By Jim May, Wade Kolb III, and Camden Massingill
The U.S. Department of Justice has unveiled its Civil Rights Fraud Initiative, Civil Division | Report Fraud Against the Federal Government, a significant expansion of federal enforcement aimed at targeting “fraud” that impacts civil rights – specifically, Diversity, Equity, and Inclusion programs. The message is clear: DOJ is reorienting its affirmative civil practice to target left-leaning programs that have been fashionable over the past five to ten years in business, housing, education, healthcare, and voting access.
For those operating in regulated industries or receiving federal funds, this signals a heightened risk of investigation—even in cases where no overt discriminatory intent was present.
As former federal prosecutors and seasoned defense counsel, we recognize this moment as a critical inflection point.
A Policy Shift Anchored in Civil Investigative Tools and Intent Inference
The Civil Rights Fraud Initiative blends two traditional enforcement tools:
- Civil Rights statutes, which often hinge on proof of discriminatory impact or disparate treatment, and
- Civil fraud enforcement mechanisms, such as the False Claims Act, which now require proof of knowledge, recklessness, or deliberate ignorance.
In the past months many notable institutions of higher education, as well as law firms, have been targeted by the administration. This initiative will focus on programs and funding that for years were praised but now will be a bullseye for not only DOJ, but also for whistleblowers. Conduct that was once encouraged by certain former administrations now, arguably, may amount to disparate impact—or, in the case of alleged compliance failures, may be interpreted as willful disregard. The Department’s announcement makes clear that “intent” may be inferred from patterns, outcomes, or systemic practices—broadening DOJ’s runway.
Civil Investigative Demands (CIDs): The First Front in a Long Battle
Our firm has responded to—and defeated—hundreds of Civil Investigative Demands (CIDs) issued under the False Claims Act and similar statutes. These demands are not benign; they often serve as the entry point into years of litigation or costly settlements. The DOJ’s new initiative makes clear that CIDs will be used more aggressively and more frequently in contexts where civil rights concerns intersect with federal funding.
Whether you are a healthcare provider audited for disparities in Medicaid outcomes, a housing developer accused of discriminatory tenant screening practices, or an educational entity flagged for past programs, the CID may be the first—and only—chance to stop an enforcement snowball from rolling downhill.
Why Our Experience Matters Now More Than Ever
Our firm includes attorneys that have been in the Department of Justice and understand how civil fraud and civil rights enforcement teams think, prioritize, and prosecute. We know the internal pressures that drive cross-division coordination, especially when political mandates—like this new Initiative—spur novel legal theories and aggressive timelines.
We’ve defended clients from investigations where “fraud” was claimed without financial motive, and “discrimination” was alleged without discriminatory intent. We know how to challenge statistical assumptions, debunk inference models, and reframe narratives built on ambiguity.
Most importantly, we know how to win in the gray area between civil fraud and civil rights liability.
Now is the Time to Prepare, Not React
The DOJ has made its intentions plain: it will use civil fraud statutes to address inequity, and civil rights statutes to uncover fraud. That’s a powerful—and perilous—combination for any organization touching federal dollars.
We are advising our clients to:
- Conduct privileged audits of internal data for disparities in outcomes—not just compliance processes;
- Revisit training and documentation, especially where human discretion plays a role in federally funded decisions;
- Have a response plan ready for CIDs or subpoenas, with legal counsel equipped to rebut both legal and narrative claims.
Voluntary Self-Disclosure to DOJ
Against this backdrop, the DOJ’s Voluntary Self-Disclosure Pilot Program becomes a powerful risk-mitigation tool. For organizations navigating the complex and evolving compliance terrain—particularly those with legacy DEI policies, disparate impact risk, or institutional blind spots in civil rights enforcement—the voluntary disclosure process can serve as a reputational and financial safeguard. Rather than waiting to be on the defensive when a whistleblower or federal auditor surfaces the issue, entities can get ahead of liability by conducting internal audits, identifying exposure points, and engaging with the DOJ in a posture of good faith and transparency. This strategic move can materially alter the outcome of an investigation, allowing the entity to control the narrative and reduce long-term damage.
The convergence of the Civil Rights Fraud Initiative and the DOJ’s self-disclosure incentives should serve as a wake-up call to institutions with federal funding. Recent developments send a strong message: compliance with civil rights laws is no longer a box to check—it’s a material representation with legal consequences under the FCA. For those entities uncertain about the legality of past conduct or current policy frameworks, now is the time to act. Early voluntary disclosure not only limits legal and financial exposure but also positions the organization as a partner in civil rights enforcement, rather than a target of it.
If your organization has received federal money and has had an active DEI program, consider engaging counsel with real DOJ experience and a proven defense strategy to help you navigate these uncertain times – an ounce of prevention is worth a pound of cure. At Wyche, we bring the DOJ’s own tools to bear in your defense—and we know how and where to press back.
