On May 19, 2025, the U.S. Department of Justice (DOJ) unveiled the Civil Rights Fraud Initiative (CRFI), through which the DOJ plans to leverage the False Claims Act (FCA) against entities that receive federal funds and allegedly engage in discriminatory practices. According to the memorandum from Deputy Attorney General (DAG) Todd Blanche, the CRFI "will utilize the False Claims Act to investigate and, as appropriate, pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws." The DOJ Civil Division's Fraud Section and Civil Rights Division will co-lead the CRFI. Federal contractors and others who receive federal funding, including higher education institutions, should consider potential investigative and enforcement risks and risk mitigation measures.

The CRFI aligns with the administration's continued push against "illegal" diversity, equity, and inclusion (DEI) in the federal government and private sector and is a natural follow-on to previously imposed requirements for federal contractors to certify adherence with anti-discrimination laws. DAG Blanche's memorandum referred to Executive Order (E.O.) 14173, "Ending Illegal Discrimination and Restoring Merit-Based Opportunity," which established new contractual requirements for recipients of federal funding and stated that compliance with anti-discrimination law is material to payment decisions, requiring federal contractors to certify that they do "not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws." E.O. 14173 also required the Attorney General (AG), in consultation with the heads of agencies, to submit a report to the White House by May 21, 2025, recommending enforcement measures to "encourage the private sector to end illegal discrimination and preferences, including DEI," and to propose a "strategic enforcement plan" that identifies "specific steps or measures to deter programs or principles (whether specifically denominated 'DEI' or otherwise) that constitute illegal discrimination or preferences." Specifically, the E.O. requires each federal agency to "identify up to nine potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of 500 million dollars or more, State and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars." The enforcement plan is also expected to address strategies to encourage the private sector to end "illegal DEI discrimination and preferences," and identify potential litigation, regulatory action, and guidance in this area. The AG's recommended enforcement actions have not been publicly announced.

Consistent with the E.O., DAG Blanche's memorandum "strongly encourages" private parties to act as qui tam relators by filing and litigating lawsuits under the FCA and to report discrimination to the DOJ. Referencing 31 U.S.C. § 3730, the memorandum explicitly notes that private parties stand to share in any monetary recovery obtained as a result of such litigation.

Key Takeaways

• Focus on Educational Institutions. The memorandum draws attention to universities, which have been a consistent target of executive actions under the current administration. The memorandum notes that a university that receives federal funds could be found to violate the FCA when it "encourages antisemitism, refuses to protect Jewish students, allows men to intrude into women's bathrooms, or requires women to compete against men in athletic programs." This announcement comes only days after the DOJ issued a Civil Investigative Demand to investigate alleged FCA violations by Harvard University on a similar basis. (We have previously discussed the risks faced by universities here.)
• Application to Federal Contractors. The memorandum also explicitly extends beyond universities, noting that the CRFI "is also implicated whenever federal-funding recipients or contractors certify compliance with civil rights laws while knowingly engaging in [alleged violations]." Again, the administration has already explicitly laid the groundwork for application of the FCA to government contractors more broadly, including through E.O. 14173's requirement that such entities certify that they do not operate any DEI programs or initiatives that violate federal anti-discrimination laws. DAG Blanche's memorandum confirms the administration's intent to pursue this avenue of enforcement.
• Joint Leadership and Nationwide Coordination. To "ensure a comprehensive approach," the memorandum expects the Civil Rights Section and Civil Rights Division to regularly coordinate with each other, the Criminal Division, and other federal agencies. In addition, each of the 93 U.S. Attorney's Offices is tasked with appointing an Assistant U.S. Attorney to support the CRFI.

For more information, please contact:

Ann Sultan, asultan@milchev.com, 202-626-1474

Bradley E. Markano, bmarkano@milchev.com, 202-626-6061

Joshua Drew, jdrew@milchev.com 202-626-5811

or any attorney in our False Claims Act Litigation group.

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