Trump Administration Investigates Google, Verizon Over Alleged DEI Fraud

In a sweeping legal maneuver that has sent shockwaves through corporate America, the Trump administration has begun wielding the Civil War-era False Claims Act to target major corporations over their diversity, equity and inclusion (DEI) initiatives, according to a December 29 report in The Wall Street Journal.

Federal investigators have demanded internal documents from several corporate giants, including tech behemoth Google and telecommunications leader Verizon, regarding their DEI practices in hiring and promotion. The Justice Department’s investigation continues despite both companies having already dismantled their diversity programs—Google in early February and Verizon in May—with federal authorities arguing that the companies did not act quickly enough after President Trump’s executive order.

On January 20, 2025, his first day back in office following his second inauguration, Trump signed an executive order prohibiting both public and private institutions from implementing DEI programs, effectively making such initiatives illegal across the nation.

At the heart of this enforcement effort is the False Claims Act, signed by President Abraham Lincoln in March 1863. Originally designed to combat fraud by contractors selling defective weapons, unhealthy horses, and spoiled rations to the Union Army during the Civil War, the law enables whistleblowers to sue contractors on behalf of the government and receive a percentage of recovered funds.

Legal experts note this application represents an unprecedented expansion of the law’s scope. Traditionally, the False Claims Act has been used to combat Medicare and Medicaid fraud, government contract overbilling, and the sale of defective equipment to federal agencies. A legal analyst quoted by The Wall Street Journal described the DOJ’s current approach as a “novel interpretation” of legislation that has never before been used to enforce policy objectives.

The Justice Department’s legal theory rests on the claim that government contractors implementing DEI initiatives have effectively defrauded taxpayers, either by using federal funds to support what the administration now considers “illegal diversity quotas” or by misrepresenting their compliance with the anti-DEI executive order.

This corporate crackdown follows similar action against the education sector. Over the summer, the DOJ began applying the False Claims Act against Harvard University and other prestigious institutions that receive federal funding, alleging they “engage in unlawful discrimination through the admission process” by considering race as a factor.

The financial stakes are potentially enormous. By targeting some of America’s largest corporations, the administration could pursue billions in settlements. For context, in 2024, under the Biden administration, the DOJ recovered more than $2.9 billion through False Claims Act cases.

The administration’s aggressive stance marks a significant escalation in what has previously been treated as a cultural and political debate rather than a matter of federal fraud. “The administration is clearly signaling that DEI is no longer just a cultural debate, but a financial and legal liability,” an industry consultant told Black Enterprise, speaking on condition of anonymity due to ongoing litigation. “By framing these initiatives as potential fraud against the taxpayer, they are putting every major federal contractor on notice.”

This enforcement approach represents one of the most concrete manifestations of the administration’s opposition to corporate diversity programs, moving beyond rhetoric into potential financial penalties that could reshape how American businesses approach workforce diversity in the coming years.

The cases against Google, Verizon, and potentially other corporations could establish precedents with long-lasting implications for both corporate policies and the government’s role in regulating private employment practices through the lens of federal contracting requirements.