Senate Confirms Head of New DOJ Fraud Division as White House Launches Fraud Task Force, Signaling Wave of White Collar Crime Enforcement

On March 16, the President signed Executive Order 14395, “Establishing the Task Force To Eliminate Fraud,” in state-administered, federally funded programs for medical care, housing, food, and more. Citing the exploitation of such programs enabled by certain states’ lack of internal controls—and identifying “the staggering fraud and waste in Minnesota alone” as “a case in point”—the executive order charged this task force with “coordinat[ing] and accelerat[ing] a comprehensive national strategy to stop fraud, waste, and abuse within Federal benefit programs, including programs administered jointly with State, local, tribal, and territorial partners.” Notably, the executive order authorizes the task force to recommend withholding federal funds from state and local jurisdictions that do not implement adequate anti-fraud requirements—a tool the administration has already deployed in the Medicaid context.

Vice President JD Vance will serve as Chairman, Federal Trade Commission Chair Andrew Ferguson as Vice Chairman, and Stephen Miller, Assistant to the President for Homeland Security, as Senior Advisor. This interagency task force will also include representatives from nearly a dozen federal agencies, including the Departments of Justice (DOJ), Treasury, Health and Human Services, Homeland Security, Agriculture, Labor, Housing and Urban Development, Education, and Veterans Affairs, as well as the Small Business Administration and the Office of Management and Budget. Relatedly, on March 24, the Senate voted 52-47 to confirm Colin McDonald, an associate deputy attorney general on detail from the U.S. Attorney’s Office for the Southern District of California, as the newly created Assistant Attorney General for Fraud within the DOJ.

The Executive Order’s Mandate on Fraud Enforcement

The executive order’s mandate is sweeping: The task force is charged with improving eligibility verification, implementing prepayment integrity controls, evaluating indicators of fraud and high-risk vulnerabilities, promoting information-sharing between federal and state governments, and disrupting fraud networks and facilitators. It anticipates quick action to achieve these goals. Within 30 days, each member agency must identify benefit transactions and processes most susceptible to fraud; within 60 days, the task force is to coordinate the adoption of minimum anti-fraud requirements, including screening and identity verification, prepayment risk controls, enhanced data-sharing, and audit and remedial measures such as suspension, termination, and debarment; and within 90 days, each task force member must submit a measurable implementation plan to the task force’s Chairman and Vice Chairman.

The executive order also directs the Attorney General to “take appropriate action to promote the meritorious pursuit by private persons of civil actions under 31 U.S.C. § 3730”—i.e., qui tam actions under the federal False Claims Act—“concerning fraud within Federal benefit programs,” and to ensure prompt review of such actions. This provision signals that the administration will leverage whistleblower litigation as an additional enforcement tool.

Legal commentators have observed that the new task force may significantly boost white collar defense work, as the establishment of a new fraud enforcement infrastructure is expected to lead to increased investigations, prosecutions, and enforcement actions across a range of industries.

Key Takeaways

The establishment of a new fraud enforcement infrastructure is expected to drive a significant increase in investigations, prosecutions, and enforcement actions across multiple industries. Participants in federal benefit programs should monitor for forthcoming “anti-fraud requirements” issued by the task force and take proactive steps to ensure compliance.

Given the task force’s interagency structure, enforcement efforts may create overlapping areas of exposure for entities subject to the jurisdiction of multiple regulators. In addition, the task force’s authority to withhold federal funding from jurisdictions with inadequate anti-fraud controls may have downstream effects on companies that participate in or support federally funded benefit programs at the state and local levels.

The executive order’s directive to the Attorney General to promote qui tam actions under the False Claims Act in connection with federal benefits fraud may also lead to an uptick in whistleblower-initiated litigation. Companies involved in administering, servicing, or otherwise participating in federal benefit programs should review and, where necessary, strengthen their compliance programs and internal controls in light of this heightened enforcement environment.

The aggressive timelines in the executive order suggest that these enforcement mechanisms may be implemented rapidly. Companies should act now to assess potential exposure and mitigate risk.

For specific guidance on navigating the evolving fraud enforcement landscape and evaluating compliance and risk mitigation strategies, please contact the Lowenstein Sandler White Collar Defense Group.