DOJ Launches Civil Rights Fraud Initiative Using False Claims Act: Guidance for Federal Fund Recipients

In a significant policy shift, the Department of Justice announced a new Civil Rights Fraud Initiative on May 19, 2025, aimed at holding organizations accountable for misrepresenting their compliance with federal civil rights laws while receiving government funding.

Deputy Attorney General Todd Blanche unveiled the initiative, which will be jointly led by DOJ’s Civil Rights Division and the Civil Division’s Fraud Section. The program marks a notable expansion in the government’s civil rights enforcement strategy by applying the False Claims Act (FCA) to civil rights violations.

The initiative targets entities that certify compliance with civil rights laws but fail to uphold those standards in practice. “We are focusing on organizations that exploit civil rights certifications to secure federal funds while tolerating discrimination, antisemitism, or unlawful exclusionary practices,” Blanche stated.

This approach represents a significant evolution in how the False Claims Act is applied. Traditionally used to combat financial fraud involving federal funds, the DOJ is now extending its reach to include false certifications regarding civil rights compliance as grounds for liability.

The initiative will specifically target several areas of concern, including institutions that fail to address antisemitic conduct, particularly in educational settings receiving Department of Education funding. It will also scrutinize diversity, equity, and inclusion (DEI) programs that may confer benefits based on race, national origin, or ethnicity in potential violation of equal protection principles.

Other focus areas include organizations that restrict access to sex-segregated programs or facilities based on gender identity in ways the DOJ considers discriminatory, and entities that retaliate against individuals reporting discrimination.

To implement this initiative effectively, the DOJ has created a specialized team combining civil rights attorneys and fraud prosecutors. This team will coordinate with all 93 U.S. Attorneys’ Offices nationwide and collaborate with multiple federal agencies, including the Departments of Education, Health and Human Services, Housing and Urban Development, and Labor.

State attorneys general and local enforcement agencies will also be engaged in this effort. Significantly, the DOJ emphasized that private whistleblowers will play a central role in enforcement through the FCA’s qui tam provisions, which allow individuals who report misconduct to receive between 15-30% of any financial recovery.

The initiative creates substantial new legal exposure for federal contractors, grant recipients, and other federally funded entities. Organizations now face heightened scrutiny not only for their current policies but also for how they document compliance, handle complaints, and represent themselves to federal agencies.

Key risk areas include DEI programs that define eligibility or advancement based on race or ethnicity, especially when connected to federal funding; failure to investigate antisemitic behavior; incomplete documentation of civil rights compliance certifications; and inconsistent application of nondiscrimination policies.

Legal experts note that entities can be held liable under the FCA even if their conduct isn’t overtly fraudulent. If the DOJ or courts determine that civil rights noncompliance was material to the government’s funding decision, and the recipient knew or should have known about the noncompliance, significant penalties may follow.

The financial implications could be substantial. Under the False Claims Act, violators face potential treble damages and penalties exceeding $25,000 per false claim. For educational institutions, healthcare providers, and government contractors, this could translate to millions in liability.

Organizations receiving federal funds should take immediate steps to mitigate risk, including conducting compliance audits of civil rights policies, assessing DEI programs to ensure legal defensibility, reviewing all standard civil rights certifications made to federal agencies, and strengthening internal complaint-handling mechanisms.

Legal observers predict this initiative will drive significant FCA litigation in coming years, similar to DOJ’s pandemic-related fraud initiatives. Organizations can expect investigative subpoenas, document demands, DOJ-led suits in high-profile sectors, and an increase in private whistleblower suits from employees, students, contractors, and advocacy groups.

The initiative underscores a growing trend of using financial enforcement mechanisms to drive social policy compliance, creating a complex new landscape for organizations that interact with the federal government.