DOJ Rule Filing Helps Make White Collar Fraud Enforcement Restructuring Final
On August 18, 2026, the U.S. Department of Justice published a final rule formally establishing the National Fraud Enforcement Division (“NFED”) within DOJ’s organizational regulations and defining the authorities of its Assistant Attorney General. The rule largely formalizes changes announced since April, when DOJ created NFED and began reallocating fraud enforcement responsibilities between the new Division and the Criminal Division.
The final rule gives NFED broad authority over criminal fraud matters, including criminal tax, trade fraud, fraud involving federal funds, healthcare fraud, and related offenses. At the same time, the Criminal Division retains broad fraud authority, leaving DOJ with a more flexible jurisdictional scheme than the public sector/private sector division of labor described by Department leadership in recent months.
We examine how the final rule institutionalizes DOJ’s new white-collar enforcement structure, what it means for the allocation of matters between NFED and the Criminal Division, and the practical implications for companies facing potential exposure across both enforcement portfolios. Click here to read the full post.
DOJ’s $5.15 Million FCA Settlement Reinforces Focus on Tariff and Customs Compliance
On August 5, 2026, DOJ announced a $5.15 million settlement with a Taiwanese light-emitting diode (“LED”) manufacturer and its Texas-based subsidiary to resolve allegations under the False Claims Act (“FCA”), the common law, and the Tariff Act of 1930, as amended, that the companies knowingly failed to pay additional tariffs on Chinese-origin LEDs imported into the United States. The claims stem from a qui tam suit filed by a former employee. See United States ex rel. Wang v. Everlight Electronics Co., Ltd., et al., No. TDC-21-cv-1607 (D. Md.). As we reported here and here, this settlement is the latest example of DOJ’s push to target trade fraud through its Trade Fraud Task Force.
Laboratory, Owners, and Investors Settle COVID-19 Testing Fraud Allegations for $24 Million
On July 23, 2026, the Department of Justice announced that clinical lab Magnolia Diagnostics and its owners agreed to pay $19.2 million to resolve allegations that they violated the False Claims Act by billing Medicare for medically unnecessary respiratory pathogen panel (“RPP”) testing performed in connection with COVID-19 testing at senior living communities. Notably, Magnolia’s investors separately agreed to pay an additional $4.8 million to resolve alleged common law claims for unjust enrichment and payment by mistake and claims under the Federal Debt Collection Procedures Act arising from distributions they received from the laboratory. Assistant Attorney General Brett Shumate emphasized that the Department will seek to hold accountable not only entities that submit false claims, but also individuals and investors who allegedly benefit from fraudulent conduct, which is consistent with previous statements of DOJ’s enforcement priorities and resolutions, as we covered here and here.
Delaware Supreme Court Rejects Jarkesy-Based Jury Trial Challenge to State Administrative Enforcement Proceeding
On July 16, the Delaware Supreme Court held that defendants facing securities fraud and registration claims in administrative proceedings brought by the Delaware Investor Protection Unit are not entitled to a jury trial under the Delaware Constitution, distinguishing the U.S. Supreme Court’s decision in SEC v. Jarkesy. Applying its recently adopted Blue Beach Bungalows framework, the court concluded that the state statutory claims are not sufficiently analogous to common-law actions historically tried before a jury, despite the availability of monetary penalties.
The decision underscores that jury-trial challenges to state administrative enforcement actions will turn on the text and history of each state’s constitution and statutory scheme, rather than Jarkesy alone. With similar challenges pending in other jurisdictions, including Arizona, the ruling provides important guidance for regulators and litigants assessing the continued viability of administrative enforcement proceedings seeking civil penalties. Click here to read the full blog post.
June DOJ/SBA FCA Settlement Highlights Continued Focus on Contractor Compliance
On June 9, 2026, DOJ announced a settlement with Broadway Electric Inc. (“Broadway”); its subsidiary, Cornerstone Contracting Inc. (“Cornerstone”); and two of their individual executives, for $21.3 million to resolve False Claims Act allegations. The settlement targeted alleged fraud against the Small Business Administration’s (“SBA”) set-aside contract program for service-disabled veteran-owned small businesses (“SDVOSBs”). The settlement suggests that the government is surging resources to both anti-fraud issues generally, and to alleged SBA fraud in particular.
External Review Recommends Sweeping Changes to FINRA Enforcement Program
On June 30, the Financial Industry Regulatory Authority (FINRA) published an outside expert report setting forth significant recommendations for the management, investigation, review, and resolution of enforcement matters. FINRA commissioned the review in July 2025 as part of its FINRA Forward modernization initiative, retaining Professor Paul Eckert of William & Mary Law School and former SEC Commissioner Troy Paredes to evaluate opportunities for “meaningful, common-sense improvements” to FINRA’s enforcement program.
EU Forced Labor Regulation Moves Toward Implementation: How Companies Should Prepare
On June 26, 2026, the European Commission (Commission) published its long-awaited guidelines on the Forced Labor Regulation (FLR). The FLR, which entered into force in December 2024 (see Sidley Update of December 2024) and will apply in full from December 14, 2027, introduces a broad ban on products made, wholly or partly, with forced labor at any stage of the supply chain, regardless of product type, sector, or origin.
HHS-OIG Decertifies New York Medicaid Fraud Control Unit, Escalating Federal Scrutiny of State Medicaid Fraud Enforcement
The Administration has taken another significant step in its effort to increase pressure on state Medicaid Fraud Control Units (“MFCUs”). On July 2, 2026, the United States Attorney’s Office for the Northern District of New York announced the U.S. Department of Health and Human Services Office of Inspector General (“HHS-OIG”) denied recertification of New York’s MFCU and suspended its federal funding effective July 1. The decision follows the Administration’s announcements earlier this year that it would closely scrutinize state MFCU performance, including through funding consequences for states perceived as failing to aggressively investigate and prosecute Medicaid fraud.