DOJ Civil Rights Initiative Increases False Claims Act Risks for Organizations with Unlawful Diversity Programs

In a significant shift in federal enforcement strategy, U.S. Deputy Attorney General Todd Blanche has unveiled a new “Civil Rights Fraud Initiative” that will leverage the False Claims Act to target recipients of federal funds who violate civil rights laws. The memorandum, issued on May 19, 2025, directs Department of Justice attorneys nationwide to aggressively investigate potential civil rights violations by entities receiving government funding.

The initiative provides enforcement mechanisms for President Donald Trump’s Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” which was signed on his first day in office. The order requires federal contractors to certify they do not operate diversity, equity, and inclusion (DEI) programs that violate federal anti-discrimination statutes.

Under the new directive, federal contractors must acknowledge that compliance with anti-discrimination laws is material to government payment decisions. This materiality provision was widely interpreted as laying groundwork for False Claims Act enforcement against employers with certain DEI initiatives.

The DOJ’s memorandum specifically targets what it describes as “many corporations and schools” that continue to “adhere to racist policies and preferences” while disguising their “discriminatory nature” with superficial changes. The initiative will be jointly led by the Civil Division’s Fraud Section and the Civil Rights Division.

Among the examples cited in the memorandum are universities receiving federal funding that “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.” The initiative also targets federal contractors that certify compliance with civil rights laws while maintaining DEI programs that “assign benefits or burdens on race, ethnicity, or national origin.”

To implement this sweeping enforcement effort, the DOJ is creating a nationwide team that includes an assistant U.S. attorney from each of the 93 U.S. Attorney’s Offices across the country. This team will coordinate with the Criminal Division and collaborate with other federal agencies that enforce civil rights requirements, as well as state attorneys general and local law enforcement.

The initiative also encourages private whistleblowers to file qui tam lawsuits under the False Claims Act. These suits allow individual whistleblowers to share in monetary recoveries – up to 30 percent of the total amount recovered by the government – creating significant financial incentives for employees or other parties to report potential violations.

For businesses and organizations that receive federal funding, the implications are substantial. Industries particularly affected include healthcare and life sciences, defense contractors, and educational institutions. These entities must now ensure their policies fully align with federal anti-discrimination laws and conduct thorough due diligence before certifying compliance to the government.

Organizations should also update their compliance programs and carefully evaluate legal risks associated with existing DEI initiatives. The memorandum makes clear that the absence of what the administration terms “illegal DEI” programs or policies is now considered a material condition for receiving federal funds.

Legal experts recommend that all employers – whether privately held, publicly traded, or federal contractors – conduct comprehensive attorney-client privileged reviews of their DEI-related programs and policies to assess potential exposure under this new enforcement regime.

This initiative represents a significant shift in how the federal government approaches civil rights enforcement, using the powerful False Claims Act – traditionally deployed against financial fraud in government contracting – to target perceived discrimination in institutional policies. With qui tam provisions creating financial incentives for whistleblowers and a nationwide enforcement team, organizations receiving federal funds face heightened scrutiny of their internal practices and policies.