Justice Department Launches Civil Rights Fraud Initiative Targeting DEI Programs

The Department of Justice has established a new Civil Rights Fraud Initiative that will use the False Claims Act to investigate and pursue claims against federal fund recipients who allegedly violate civil rights laws while operating diversity, equity, and inclusion programs.

According to a memorandum issued by Deputy Attorney General Todd Blanche on May 19, 2025, the initiative will target organizations that “knowingly violate civil rights laws” such as Title VI, which prohibits discrimination based on race, color, or national origin, and Title IX, which prohibits sex-based discrimination in federally funded programs.

The initiative represents a significant shift in how the DOJ applies the False Claims Act, a law dating back to 1863 that traditionally targeted contractors who submitted fraudulent bills or engaged in bid collusion. Now, the statute will be deployed against institutions the administration believes are conducting discriminatory DEI practices while receiving federal funds.

“The False Claims Act is implicated whenever federal-funding recipients or contractors certify compliance with civil rights laws while knowingly engaging in racist preferences, mandates, policies, programs, and activities, including through diversity, equity, and inclusion programs that assign benefit or burdens on race, ethnicity, or national origin,” the memorandum states.

While universities appear to be primary targets—with Blanche emphasizing that “colleges and universities cannot accept federal funds while discriminating against their students”—the initiative’s scope extends to all federal funding recipients, potentially affecting healthcare organizations, government contractors, and other entities relying on federal dollars.

The DOJ’s Civil Division’s Fraud Section and the department’s Civil Rights Division will co-lead enforcement efforts, with instructions to “aggressively pursue” violations. The memo directs coordination with the DOJ’s Criminal Division, other federal agencies, state attorneys general, and local law enforcement. Each of the 93 U.S. Attorney’s Offices nationwide has been instructed to designate an Assistant U.S. Attorney to support the initiative.

The memorandum specifically encourages whistleblowers to file lawsuits under the False Claims Act’s qui tam provision, which allows private parties to litigate claims and receive a portion of any monetary recovery—a mechanism that could significantly expand the number of cases brought forward.

This latest action follows previous executive orders targeting DEI programs. Executive Order 14173 directed federal agencies to combat “illegal DEI preferences within the private sector,” while Executive Order 14151 ordered the termination of all DEI-related federal programs. The initiative also builds on Attorney General Pam Bondi’s February 5, 2025, memorandum that committed the DOJ to “investigate, eliminate, and penalize” illegal DEI activities in the private sector and at educational institutions receiving federal funds.

Executive Order 14173 specifically requires federal contractors and grant recipients to certify that they “do not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws” and to acknowledge that compliance “is material to the government’s payment decisions” under the False Claims Act.

For organizations receiving federal funding, the repurposed application of the False Claims Act introduces significant financial risk. Violations can result in treble damages and substantial statutory penalties, creating potentially devastating liability for non-compliance.

Legal experts note that defendants may have several avenues to challenge such enforcement actions, including defenses related to scienter (knowledge of wrongdoing), materiality, and causation—specifically whether an organization knowingly made false certifications that were material to its receipt of federal funding.

The initiative’s focus extends beyond traditional DEI programs. The memorandum mentions that recipients could violate the FCA by failing to “protect Jewish students, allowing men to intrude into women’s bathrooms, or requiring women to compete against men in athletic competitions,” suggesting a broad interpretation of civil rights enforcement.

For institutions receiving federal funding, particularly higher education and healthcare organizations, this initiative signals an urgent need to evaluate existing DEI programs and ensure compliance with civil rights laws as interpreted by the current administration. Given the potential penalties involved, affected organizations should consider strengthening compliance programs and implementing appropriate risk mitigation strategies.