May 52026

New Division Continues Time-Tested Model: DOJ’s National Fraud Enforcement Division Launches West Coast Health Care Fraud Strike Force

Lisa H. Miller, Mallory W. Edel, Dave Anderson, Kevin R. Rubino, Sheila A.G. Armbrust and Douglas A. Axel
, , ,

In a further sign that healthcare fraud enforcement remains a top Department of Justice (“DOJ”) priority, on April 30, 2026, the National Fraud Enforcement Division ( “Fraud Division”) announced the launch of the West Coast Health Care Fraud Strike Force (“West Coast Strike Force”).  While the Fraud Division was itself newly created, this latest news is of a piece with the traditional model and enforcement approach of DOJ’s dedicated health care fraud team going back to 2007.  Most recently, DOJ’s Health Care Fraud (“HCF”) Unit—which was absorbed into and renamed the HCF Section within the Fraud Division—announced expansion of its long-running Strike Force program into the District of Massachusetts.  The West Coast Strike Force represents an expansion further still of the HCF Section’s reach.  Consistent with the Strike Force model, the U.S. Attorneys’ Offices for the District of Arizona, District of Nevada, and Northern District of California will partner with HCF Section prosecutors and relevant law enforcement agencies (HHS-OIG, FBI, and DEA) to build cases in the region based on data analytics as well as traditional case sources (cooperators, whistleblowers, and tips).

Long-tenured career personnel who have experience in both corporate and individual healthcare prosecutions, HCF Acting Chief Jacob Foster and Acting Assistant Chief Gary Winters, will be tasked with leading this new regional strike force.  As with any new initiative, we expect that the team will want to showcase public results as a proof of concept and at a minimum, look for press opportunities regarding cases in the pipeline.

Indeed, this team already has a track record of activity in the region, as the announcement highlights accelerating health care fraud trends across all three districts, including the migration of fraud schemes to Arizona and Nevada and the growth of technology-driven health care fraud in Northern California, a significant hub of health care technology.  The announcement points to several recent high-impact prosecutions as the foundation for the new Strike Force, including the conviction of medical technology company executive for COVID-19 health care fraud.

Health Care Fraud Enforcement Continues Under A New Banner

Nationally, since its inception, the HCF Strike Force program has been responsible for the prosecution of over 6,200 defendants who collectively billed federal health care programs and private insurers more than $45 billion. What is new is the Fraud Division’s role as the lead DOJ component, a shift from the prior structure in which the HCF Unit sat within the Fraud Section of DOJ’s Criminal Division.  The creation of the Fraud Division in April 2026, discussed in a prior Sidley update, raised questions about the future of the HCF Unit and whether it would be restructured or refocused. The West Coast Strike Force announcement signals the new Fraud Division has absorbed the HCF Unit with its focus, Strike Force model, and leadership structure largely intact thus far.

Strike Force Announcement Emphasizes Corporate Enforcement in Focus

Interestingly, in addition to encouraging members of the public to report wrongdoing, the West Coast Strike Force announcement invokes DOJ’s corporate enforcement policy (the “CEP”), which contains incentives for companies to voluntarily disclose misconduct.  The inclusion of the CEP, which is focused on corporate criminal enforcement, suggests that the Fraud Division intends to pursue corporate health care fraud cases in addition to pursuing individual prosecutions.  This is not surprising given the increased volume of corporate prosecutions pursued by the HCF team in recent years but is notable given that the tenor of prior announcements around the creation of the Fraud Division seemed to focus more on individual prosecutions.

As Sidley discussed in our March analysis of the CEP, companies should continue to carefully evaluate the risk-reward calculus of voluntary self-disclosure.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.

Contacts
Lisa H. Miller

Washington, D.C.

lisa.miller@sidley.com

Mallory W. Edel

New York

medel@sidley.com

Dave Anderson

San Francisco

dlanderson@sidley.com

Kevin R. Rubino

San Francisco

krubino@sidley.com

Sheila A.G. Armbrust

San Francisco

sarmbrust@sidley.com

Douglas A. Axel

Los Angeles

daxel@sidley.com

You might also like
Better Late Than Never: DOJ’s National Security Division Resolves First “Near Miss” Self-Disclosure Under Department-wide Corporate Enforcement Policy

On October 27, 2026, the U.S. Department of Justice (DOJ or the Department) announced that its National Security Division (the NSD) had entered into a non-prosecution agreement (NPA) with Extreme Networks, Inc. (Extreme Networks) to resolve sanctions and export control violations involving sales to a Russian weapons manufacturer. The resolution is the first “near miss” NPA under DOJ’s Department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy (the CEP), and the first resolution under the CEP announced by the NSD. The resolution illustrates how the Department distinguishes between an imperfect self-disclosure, which may still earn substantial credit, and a failure to self-disclose at all.

The Extreme Networks Agreement

According to DOJ, between March 2018 and March 2022, Extreme Networks used a Russia-based subsidiary and a third-party distributor to fulfill purchase orders from Moscow Machinery Building Plant Avangard (MMZA), a weapons manufacturer whose owner has been on the Specially Designated Nationals and Blocked Persons List maintained by the Department of the Treasury’s Office of Foreign Assets Control (OFAC) since July 2014, while concealing MMZA’s role in those sales. Extreme Networks also filed false export information, which impeded enforcement of sanctions and export controls that DOJ described as “designed to protect national security and economic interests.”

DOJ classified the matter as a “near miss” under the second prong of the CEP’s three-part framework. Although Extreme Networks self-disclosed the misconduct, it did so only when a news publication was poised to report on it. Because the disclosure was made under the imminent threat of public disclosure, it did not satisfy the CEP’s requirement that a voluntary self-disclosure be timely.

DOJ nonetheless agreed to resolve the matter through an NPA, citing the absence of aggravating circumstances and the company’s cooperation and remediation, which included:

  • Providing relevant facts and documents and making employees available for interviews;
  • Terminating its relationship with the third-party distributor used to facilitate the sales;
  • Improving screening procedures and hiring additional compliance personnel; and
  • Implementing diligence procedures in connection with mergers and acquisitions.

The NPA requires Extreme Networks to forfeit $487,860.92, the proceeds it received from its export misconduct, and pay a $487,860.92 criminal fine. Extreme Networks also agreed to a settlement amount of $1,529,685.00 with OFAC to resolve a parallel action arising out of the same conduct. OFAC considered the case to have been voluntarily self-disclosed and egregious, noting Extreme Networks “acted with reckless disregard for U.S. sanctions when it failed to conduct sufficient due diligence to recognize that MMZA was a blocked person, and when it failed to heed numerous warning signs that MMZA was the ultimate recipient of the goods.” Extreme Networks’ obligation to pay a portion of the OFAC settlement amount was deemed satisfied by its payment of the fine to DOJ, resulting in Extreme Networks being required to pay $1,041,824 pursuant to the settlement agreement with OFAC, which is available here.

The Resolution Demonstrates DOJ’s New CEP in Practice

As discussed in our prior Update, DOJ adopted the Department-wide CEP in March 2026. The CEP establishes three tiers: declinations for companies that voluntarily self-disclose, fully cooperate, timely remediate, and present no aggravating circumstances; “near miss” resolutions where “a company attempted in good faith to self-disclose but either it failed to satisfy DOJ’s technical criteria for voluntary disclosure or aggravating circumstances are present and prosecutors do not recommend declining”; and resolutions for all other companies. Extreme Networks fell within the first branch of the second tier because its disclosure was made in good faith but was not considered timely under the CEP’s criteria.

The resolution suggests that DOJ will apply the timeliness requirement strictly, including the condition that a disclosure precede any “imminent threat of disclosure or government investigation.” Extreme Networks’ resolution contrasts with the July 2026 declination granted to Campus Eye Management, where DOJ identified timely voluntary self-disclosure as a key factor supporting first-tier treatment, as discussed in our prior Update. Taken together, the two resolutions indicate that DOJ is distinguishing between companies that fully satisfy the CEP’s disclosure requirements and those that fall short, while continuing to reward cooperation and remediation in both circumstances.

The resolution also offers insight into how DOJ assesses aggravating circumstances. Although the misconduct involved sanctions and export controls that DOJ characterized as protecting national security, DOJ did not treat the case as aggravated. This is consistent with the CEP’s focus on the circumstances of the misconduct rather than the category of offense. The relevant factors include (i) the nature and seriousness of the offense, (ii) the egregiousness or pervasiveness of the misconduct within the company, (iii) the severity of harm caused, and (iv) corporate recidivism. Accordingly, a national security nexus by itself does not appear to preclude near-miss treatment.

Key Takeaways

  • The CEP now governs corporate misconduct across DOJ. Before March 2026, DOJ’s voluntary self-disclosure program was organized under the Criminal Division. DOJ has expanded the CEP to every DOJ component other than the Antitrust Division, and this resolution confirms that the NSD is applying it to sanctions and export control matters. Companies should assess whether their internal reporting and escalation procedures account for potential misconduct across all areas DOJ enforces, recognizing that self-disclosure may earn credit regardless of which component has jurisdiction, while a failure to disclose may result in less favorable treatment.
  • Timely disclosure is key. Extreme Networks cooperated and remediated, but its disclosure under threat of media reporting precluded a declination. Companies should ensure that screening, monitoring, and internal reporting mechanisms are designed to surface potential violations early, and should be prepared to evaluate disclosure promptly once misconduct is identified, before third parties, including the press or whistleblowers, bring the matter to light.
  • A late disclosure may still be valuable. The near-miss NPA shows that missing a declination does not eliminate the benefits of self-disclosure. Where a company identifies misconduct after the window for a timely disclosure may have closed, it should still consider disclosing promptly, particularly where no aggravating circumstances are present and the company is positioned to cooperate fully and remediate.

The NPA is available here, and the DOJ press release announcing the resolution is available here.

DOJ’s Fraud Division Launches Fast-Track Whistleblower Awards, With a Focus on Health Care Fraud

On October 20, 2026, the U.S. Department of Justice (DOJ or the Department) and its National Fraud Enforcement Division (the Fraud Division) announced the Fraud Whistleblower Incentive Program (WHIP or the Program). DOJ describes WHIP as the first whistleblower rewards program to pay an “up-front” award of between $10,000 and $30,000 for tips leading to criminal charges. Most existing government whistleblower programs pay only after final resolution of a criminal matter, including forfeiture and appeals. WHIP will instead pay awards once criminal charges are filed. The Program covers federal health care offenses and related crimes, as well as fraud on government programs and benefits administered by eight federal agencies.

WHIP’s focus on health care is particularly notable given the Fraud Division’s recent issuance of its first corporate enforcement directive naming health care as the Division’s top priority and a joint self-disclosure policy with the Department of Health and Human Services (HHS) Office of Inspector General (HHS-OIG) aimed at health care companies. Taken together, these developments indicate that health care is central to the Fraud Division’s broader mandate to address fraud on federal programs. As a result, health care companies may face increased pressure to self-disclose potential misconduct before a whistleblower reports it to the government.

Background: Directive 26-12 and DOJ’s Expanding Whistleblower Toolkit

WHIP implements Directive 26-12, which Assistant Attorney General Colin M. McDonald issued on October 1, 2026. The Directive instructed Fraud Division leadership to develop programs that encourage whistleblowers to come forward with credible information about fraud, and it named health care first among four corporate enforcement priorities, as discussed by Sidley here.

WHIP also builds on the Criminal Division’s Corporate Whistleblower Awards Pilot Program (the Pilot Program), launched in August 2024. DOJ revised the Pilot Program in May 2025 to cover certain health care offenses, and again in July 2026 to eliminate the rule automatically disqualifying whistleblowers who could have been eligible for an award under another government program. A whistleblower is now disqualified only if he or she actually receives another award for reporting the same or substantially the same misconduct, as discussed by Sidley here.

Health care fraud enforcement has also become a top priority within the Department’s reorganized fraud enforcement structure. In June 2026, DOJ’s National Health Care Fraud Takedown charged 455 defendants in alleged schemes involving more than $6.5 billion in false claims. In August 2026, the Fraud Division charged 19 defendants for their involvement in alleged home care schemes in Philadelphia involving more than $4 million in claims to Medicare and Medicaid.

The Fraud Whistleblower Incentive Program

WHIP creates a new Fraud Division award channel for members of the public, built around five components: (i) the misconduct and programs covered; (ii) the timing of awards; (iii) the Program’s priority on health care submissions; (iv) exposure for conduct outside the False Claims Act; and (v) the Program’s interaction with the Fraud Division’s joint self-disclosure policy with HHS-OIG. We discuss each below.

1.      Programs Covered

WHIP applies to reports of federal health care offenses and related crimes. It also applies to reports of fraud on programs and benefits administered by the Department of Agriculture, the Department of Labor, HHS, the Department of Housing and Urban Development, the Department of Education, the Department of Veterans Affairs, the Department of War, and the Small Business Administration. The Program therefore reaches a broad range of federally funded activity, from health care reimbursement to housing, education, veterans, and small business programs. Alongside its announcement of the Program, DOJ also announced WHIP’s first award: a $10,000 payment for allegations about federally subsidized childcare centers in Minnesota.

2.      Early Awards Tied to Criminal Charges

Awards become available once criminal charges are filed, rather than after the matter is finally resolved. DOJ explains that this approach gives whistleblowers greater certainty about the amount and timing of payment, while leaving them eligible for larger rewards if their information leads to significant financial penalties or forfeiture. Participants may also seek awards under other programs, including the Pilot Program. A single tip could therefore produce an initial WHIP payment at charging and a larger award later under another program. DOJ will make awards in its sole discretion, and the Department of the Treasury has committed $25 million to the Program.

3.      A Focus on Health Care Fraud

The Program continues the Fraud Division’s emphasis on health care. For health care offenses, DOJ has stated that WHIP will prioritize submissions involving hospice, home health care, day care, and special services fraud. These categories may reach adult day care and other Medicaid-funded community services, as illustrated by the Fraud Division’s recent Philadelphia charges, where the defendants allegedly billed Medicaid for home health aide services that were not provided.

4.      Exposure Beyond the FCA

WHIP may bring to DOJ’s attention conduct that would not previously have surfaced through qui tam actions under the False Claims Act (FCA). Administration officials stated at the Program’s launch that most of the fraud the administration is identifying falls outside the FCA, and WHIP reaches criminal offenses that may not support an FCA claim. Reporting under WHIP is also simpler than filing a qui tam complaint in court, and any member of the public may submit a tip. These features may draw reports from patients, family members, lower-level employees, and competitors who would not have pursued an FCA action. For providers and suppliers whose services and items are reimbursed by federal programs, the Program could therefore increase the volume and variety of allegations reaching the Fraud Division.

5.      Interaction With the Joint Self-Disclosure Policy

WHIP should be read together with the self-disclosure policy the Fraud Division and HHS-OIG announced on October 15, 2026, as discussed by Sidley here. That policy directs companies self-disclosing potential criminal health care matters to the Fraud Division’s Health Care Fraud Section. Qualifying disclosures receive credit under both DOJ’s Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP) and HHS-OIG’s Self-Disclosure Protocol. A qualifying disclosure must involve conduct DOJ did not already know about and must be made before disclosure or a government investigation is imminent. A disclosure made only to HHS-OIG does not qualify.

WHIP makes the timing of disclosure more important, because a fast-paying tip program for outsiders increases the risk that a whistleblower reaches the Department first. Under the CEP’s safe harbor, a company may still qualify for a declination if it self-reports within 120 days of receiving an internal whistleblower report, even if the whistleblower has already reported to DOJ. DOJ has not indicated how that safe harbor would apply where a patient, competitor, or other outsider reports through WHIP without using a company’s internal channels.

As discussed by Sidley here, DOJ’s July 2026 declination for Campus Eye Management was the first health care declination under the Department-wide CEP and only the second under any DOJ self-disclosure policy. WHIP may increase the number of matters in which DOJ learns of potential misconduct before a company has completed its own review.

Key Takeaways

  • Health care companies should anticipate more tips. Hospice, home health, day care, and special services providers are expressly prioritized. These companies should assess whether their billing, eligibility, and service documentation would withstand scrutiny prompted by outside complaints.
  • Strengthen internal reporting channels and response times. The CEP’s 120-day safe harbor depends on the company having received the report internally. An internal report starts that clock and gives the company the first opportunity to investigate and disclose. Companies should confirm that credible allegations are escalated and investigated promptly.
  • Make disclosure decisions early. Credit for voluntary self-disclosure generally depends on the company reporting before DOJ learns of the conduct. A company that identifies potentially criminal conduct affecting a federal health care program should promptly evaluate a disclosure to the Fraud Division rather than rely on a submission to HHS-OIG alone.
  • Prepare for parallel exposure. In health care, a single set of facts often gives rise to overlapping criminal, civil, and administrative matters, and the joint self-disclosure policy does not address FCA liability. Companies should coordinate their criminal, civil, and regulatory strategies from the outset.

DOJ’s press release announcing WHIP is available here, and the Program’s terms and conditions are available here. Directive 26-12 is available here.

DOJ’s Fraud Division Directs Broader Charging Strategies and Earlier Asset Seizures in New Memorandum

On October 8, 2026, the U.S. Department of Justice (DOJ) publicly released Directive 26-13, A Comprehensive Approach in the Fight Against Fraud (the Directive). Assistant Attorney General Colin M. McDonald issued the Directive on October 7 to all personnel of the National Fraud Enforcement Division (the Fraud Division). The Directive instructs Fraud Division prosecutors to look beyond traditional fraud charges in every case and to consider whether the same conduct also supports tax, securities, or consumer fraud charges; to move against proceeds, accounts, and websites early, often before any indictment; to recruit cooperating insiders; and to press for stronger sentences.

The Directive expands on the Fraud Division’s August 13 enforcement priorities and its corporate enforcement policy (Directive 26-12), discussed by Sidley here and here. Those earlier documents identified what the Division would pursue. This latest Directive sets forth how the Fraud Division expects prosecutors to pursue it. For companies involved in government contracting, health care, tax, and trade, a fraud inquiry could quickly proceed on multiple legal theories at once. It may also involve enforcement steps, such as freezing bank accounts or seizing websites, domains, and online accounts allegedly used in the fraud, that affect business operations before charges are filed. Companies should therefore assess exposure and plan for potential pre-charge enforcement activity, and revisit self-disclosure timing in light of DOJ’s expanded detection efforts.

Directive 26-13: What’s New and What’s Not

The Directive does not create new criminal offenses or new corporate enforcement standards. Its approach to corporate enforcement expressly carries forward Directive 26-12, under which the Corporate Enforcement Section leads corporate matters and companies that disclose misconduct, cooperate, and remediate receive appropriate credit. Nor does the Directive expand the Division’s legal authority. The Attorney General had already delegated to the Fraud Division, in regulations codified at 28 C.F.R. § 0.70, broad authority to bring fraud-related charges, seek injunctions under 18 U.S.C. § 1345, and seize or forfeit property. The Directive also states that it creates no rights enforceable by any party.

What is new is how Fraud Division prosecutors are expected to use those existing authorities in individual cases. The Directive converts general priorities into case-level instructions: steps prosecutors must take in every matter, specialists they must involve, and remedies they should pursue at the outset rather than at resolution. In that sense, the Directive is less a new playbook than an effort to ensure consistent use across the Fraud Division of tools that DOJ fraud prosecutors have relied on for years. For example, DOJ has long used 18 U.S.C. § 1345, the civil anti-fraud injunction statute, to obtain temporary restraining orders and preliminary and permanent injunctions to halt ongoing fraud schemes without bond. The Directive now asks Fraud Division prosecutors to consider § 1345 and other remedies systematically rather than case by case. We discuss the Directive’s principal instructions below.

Broader Charging Strategies

The Directive reminds prosecutors that charging decisions should ordinarily include “the most serious offense” encompassed by the conduct that is likely to result in a sustainable conviction. Wire fraud, health care fraud, and major fraud against the United States will often suffice. In other cases, however, the Directive contemplates additional charges to dismantle schemes, maximize recoveries, and tell “the full story” of the misconduct. It identifies three categories:

  • Tax offenses. Prosecutors must assess in every case whether there is reason to believe that the internal revenue laws have been violated. The Directive reasons that fraudsters rarely report or pay tax on fraudulent income, which creates both additional charges and additional avenues for recovery. Where tax charges may materially advance the investigation, prosecution, or recovery of assets, prosecutors should invite IRS Criminal Investigation (IRS-CI) to evaluate the conduct. If IRS-CI joins, prosecutors will work with the Division’s Tax Section to bring appropriate charges. The Directive therefore requires the assessment in every case, not tax charges in every case.
  • Securities fraud. The Directive targets companies that receive federal funds or approvals and, while defrauding the government, also mislead investors. Its examples include a publicly traded government contractor whose misstatements harm both the government and investors who rely on its financial statements, and health care fraud concealed from the investing public. The Public Trust and Financial Integrity Section will prioritize securities fraud and market misconduct tied to:
    • government programs or contracts;
    • schemes to defraud the United States;
    • foreign investment schemes targeting the federal government;
    • schemes targeting U.S. service members; and
    • health care, tax, or trade fraud.
    • To identify these matters, the Section will correlate federal program, contract, and funding data against market activity, for example by comparing a contractor’s award or payment history with trading in its securities. DOJ describes this step as intended to generate matters proactively rather than wait for referrals. The Directive also preserves Main Justice’s longstanding coordination with U.S. Attorneys’ Offices on securities matters.
  • Consumer fraud and cybercrime. Prosecutors should also evaluate consumer-focused charges, including mail, wire, and bank fraud, identity theft, and access-device offenses. The priorities include scams involving government programs or contracts; health care, consumer products, medical devices, or pharmaceuticals; service members; and schemes to defraud the United States. Prosecutors are directed to coordinate, as permitted by law, with investigative, civil, and regulatory partners to stop ongoing harm and pursue available remedies.

Asset Recovery Before Indictment

The Directive places particular emphasis on early seizure of proceeds and early disruption of ongoing schemes. Prosecutors must coordinate with the Fraud Division’s Asset Recovery Section at all stages of investigations and prosecutions. The listed measures include:

  • warrants to seize websites, domains, online accounts, and other digital property used to commit fraud or conceal its proceeds.:
  • restraining orders or seizure letters to freeze assets at banks and cryptocurrency exchanges shortly after they are stolen;
  • warrants and in rem forfeiture proceedings to seize proceeds before criminal charges; and
  • warrants to seize websites, domains, online accounts, and other digital property used to commit fraud or conceal its proceeds.

The Directive also calls for civil actions to obtain injunctions and asset restraints under 18 U.S.C. § 1345 for government fraud, banking law violations, and health care offenses. It further calls for prejudgment remedies under 28 U.S.C. §§ 3101–3105, such as attachment, garnishment, and receiverships, for any offense. These measures remain subject to the governing statutory requirements.

Proactive Cooperators

The Directive instructs prosecutors to use proactive cooperators and undercover law enforcement operations to identify and dismantle fraud networks. In evaluating cooperation, prosecutors will consider whether the cooperator disclosed criminal activity previously unknown to law enforcement. They will also consider whether the cooperation materially advanced an investigation, the seizure of proceeds, the conviction of others, or the disruption of ongoing harm.

Cooperators must fully and truthfully accept responsibility, including forfeiting property tied to their offenses of conviction and paying restitution to their victims. The Directive states that cooperators “will not get a free pass,” although prosecutors may bring substantial assistance to the sentencing court’s attention when appropriate.

Arrest, Detention, and Sentencing

The Directive ties its detention guidance to recent experience, noting that “[v]arious charged fraud defendants have fled the United States in recent years.” Prosecutors are therefore directed to assess flight risk and danger early and throughout a case. To do so, they should develop a record of the defendant’s means, ties, travel, access to assets, history of violence, and risk of obstruction. They should seek arrest warrants and detention “in all appropriate circumstances” and move promptly to modify or revoke release when conditions are violated. These are existing legal tools. What the Directive changes is the expectation that prosecutors will consider them systematically, at the outset of fraud cases, rather than case by case.

At sentencing, every presentation must address general deterrence. Prosecutors should seek all Guidelines enhancements supported by the facts and law, oppose unwarranted reductions, and seek approval for an upward variance or departure when the advisory range is inadequate. They should also pursue restitution, forfeiture, and fines reflecting the full scope of the offense. Where a sentence appears unreasonable, they should consult the Appellate Section about an appeal.

Key Takeaways

  • Assess exposure across legal disciplines. A government contracting, health care, or trade issue may also raise questions about tax treatment, investor disclosures, or consumer representations. Companies should coordinate legal, compliance, tax, and finance reviews rather than assess each issue in isolation. The Directive’s focus on persons and entities that knowingly enable, facilitate, conceal, or profit from fraud also supports examining relevant third-party relationships.
  • Plan for enforcement action before charges. Prosecutors are directed to freeze bank and cryptocurrency accounts and seize websites and domains early. A company could therefore lose access to funds or online operations before it knows the scope of an investigation. Assessing that risk should be part of the initial response to any fraud inquiry, not deferred until resolution discussions. Companies in the Directive’s priority sectors should consider identifying in advance:
    • who will respond to a seizure warrant or restraining order;
    • how critical accounts and systems would be maintained; and
    • how quickly counsel can evaluate the legal basis for a restraint and seek to narrow it.
  • Expect asset restraint to feature more prominently, and test it. Because prosecutors must involve the Asset Recovery Section at all stages, pretrial restraint of alleged proceeds may become more common where the facts support it. Counsel should assess whether, and on what theory, prosecutors presented forfeiture allegations to the grand jury and should be prepared to test the government’s tracing of restrained assets to the charged conduct.
  • Directive 26-13’s investigative methods may narrow the window for voluntary self-disclosure. Three of the investigative methods in the Directive—proactive data correlation, cooperators, and undercover operations—are designed to find misconduct before a company reports it. That timing matters because Directive 26-12—and DOJ’s Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP)—credit companies that voluntarily disclose misconduct, cooperate, and remediate. Credit for voluntary self-disclosure, however, generally depends on the company reporting first and may not be available where DOJ discovers the misconduct on its own. Companies should therefore investigate credible allegations promptly and decide on disclosure early, rather than waiting for a complete internal record.

Directive 26-13 is available here, and DOJ’s press release is available here.