Justice Department Uses False Claims Act to Target Corporate DEI Programs

The Department of Justice has moved to use the False Claims Act to press inquiries into corporate diversity, equity and inclusion programs, announcing a formal policy and following up with document demands to several large organizations. The initiative, announced in a May 19, 2025 memorandum from Deputy Attorney General Todd Blanche, creates a new enforcement posture the Department says is designed to hold recipients of federal funds accountable for alleged civil rights violations.

The memorandum established the Civil Rights Fraud Initiative and states the Initiative aims to use the False Claims Act to investigate and 'pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws'. The guidance explicitly places diversity, equity and inclusion programs within its scope and lists a range of potential targets including publicly traded corporations, large nonprofit corporations and associations, foundations with assets of five hundred million dollars or more, state and local bar and medical associations, and institutions of higher education with endowments exceeding one billion dollars.

Legal authorities cited in the memorandum rely on the False Claims Act, codified at 31 U.S.C. section 3729 et seq., which creates civil liability for knowingly presenting false claims or making false statements material to government payments. Observers note the statute permits treble damages and statutory penalties for each false claim, making it a potent enforcement tool. Commentators have described the FCA as the Department s "favorite weapon" in situations where recovery of federal funds is at issue.

Since the memorandum the Department has issued civil investigative demands and other document requests tied to these inquiries. Federal inquiries have reached at least one university through a civil investigative demand and several corporations have received requests for records; among named recipients is Google and a second corporate name appearing in materials as Ve with the full identity not disclosed in available summaries. Details about the scope of the university demand and specific allegations have not been publicly disclosed.

The Department has also moved to bolster interagency enforcement infrastructure. On July 2, 2025, Justice and the Department of Health and Human Services reestablished the DOJ HHS False Claims Act Working Group, a signal that agencies intend to combine datasets and compliance tools to detect anomalies. Advisory sources say cross referencing clinical, financial and transparency reporting such as Centers for Medicare and Medicaid Services records and Sunshine Act disclosures will factor in agency analytics.

The change in enforcement raises immediate compliance questions for organizations that receive federal funds. Legal and consulting advisories recommend that institutions strengthen internal complaint pathways, enhance anonymous reporting mechanisms and audit high risk claims and data submissions to identify outlier patterns that could trigger government scrutiny. For universities and companies with public commitments to DEI, the initiative creates elevated litigation and regulatory risk and may prompt reassessments of program design and recordkeeping.

The Justice Department s use of the False Claims Act to scrutinize civil rights related conduct represents a significant expansion of a tool long associated with healthcare and procurement fraud. The practical consequences for corporate conduct, university policies and the broader management of diversity and equity programs remain unsettled as investigations proceed and agencies refine enforcement priorities.