DOJ Fraud Division Priorities: The McDonald Memo (2026)
On August 13, 2026, Assistant Attorney General Colin M. McDonald issued the National Fraud Enforcement Division's first enforcement priorities memorandum. The memo announces that the Division will reach approximately 500 attorneys and staff by August 24, 2026, and will keep growing for the next two years. It names five priority areas: public trust and financial integrity, health care, internal revenue, global trade and commerce, and corporate misconduct.
The memo describes a division built for volume and speed. Prosecutors will be deployed nationwide alongside U.S. Attorneys' Offices, supported by a National Fraud Detection Center, data scientists, asset recovery attorneys, and a dedicated privilege review team. The Division's stated mission is to prosecute fraud in the United States "no matter its size or complexity." For anyone whose business touches federal dollars, the memo is a map of where the government will look next.
The McDonald Memo: One Division, One Mission
The National Fraud Enforcement Division is new. President Trump announced its creation earlier in 2026, and the McDonald Memo is the Division's first public statement of what it intends to prosecute. The memo opens with the numbers driving the effort. The Government Accountability Office has estimated that the federal government loses between $233 billion and $521 billion annually to fraud, and the memo notes that other models show even higher losses. The memo calls these figures "shocking" and frames the Division's work as essential to restoring public confidence in the government's stewardship of taxpayer dollars.
The memo is candid about its ambition. It describes the Division as the leader of a "whole-of-government effort to fight fraud" and pledges to build "the most sophisticated, innovative, and data-driven white-collar law enforcement component in the world." The Department is backing that language with resources. It is reorganizing substantial personnel from other components into the Division, and McDonald writes that he has an aggressive plan to keep expanding headcount for two more years.
We will not rest until we have restored public confidence that the Department of Justice can and will vigorously protect Americans from fraudsters intent on stealing the wealth of America.
Assistant Attorney General Colin M. McDonald, National Fraud Enforcement Division, August 13, 2026How the Division Is Built
Structure signals strategy. The memo attaches an organizational chart showing specialized litigating sections for health care fraud, public trust and financial integrity, tax, global trade and commerce, national enforcement, district fraud counsel, corporate enforcement, and appellate work. Behind the litigators sit an Asset Recovery Section, a Special Matters Section handling privilege review, a Criminal Investigation Section, a Strategic Analysis Section, and a National Fraud Detection Center.
Three design choices deserve attention. First, the memo says the Division will be "lean, flat, and agile," with reduced bureaucratic oversight so that career prosecutors can focus on "following the facts and charging violations of the law." Fewer layers of review means faster charging decisions. Second, prosecutors will be deployed across the country to work in concert with U.S. Attorneys' Offices, replicating the strike force model that produced the largest health care fraud takedowns in history. Third, every case will be supported by data science. The memo promises "cutting-edge data analysis" and describes new interagency partnerships that are "breaking down data barriers and eliminating silos" in fraud detection.
The memo also commits to a talent pipeline. New attorneys will typically start in the National Enforcement Section, prosecuting cases across the Division's full portfolio, and a "task force incubation program" will launch new enforcement initiatives. A division that trains prosecutors across every fraud type, then spins up dedicated task forces, is a division designed to open cases quickly and in volume.
The Five Enforcement Priorities
The memo directs Fraud Division attorneys to prioritize frauds that threaten "the health, safety, security, and prosperity of Americans," with particular focus on schemes affecting children, the elderly, and the sick or disabled. It then names five categories. The table maps each priority to the conduct the memo singles out.
| Priority | Conduct Named in the Memo | Who Is Exposed |
|---|---|---|
| Public Trust & Financial Integrity | Procurement fraud, including defective pricing, bid rigging, self-dealing, bribery, product substitution, and billing fraud. Fraud on benefit and grant programs, from student loans and child care to veterans' benefits, nutrition assistance, disaster relief, and small business programs. | Government contractors and subcontractors, grant recipients, program participants, and anyone who certified eligibility for federal funds. |
| Health Care | Telemedicine schemes, Medicare and Medicaid fraud, controlled substance diversion, home health and hospice schemes, and deceptive marketing of unsafe products and services. | Physicians, clinic and agency owners, pharmacies, labs, marketers, and executives of health care companies. |
| Internal Revenue | False return preparation, concealed income, abusive tax shelter promotion, and tax offenses layered on top of program fraud. | Return preparers, promoters, business owners, and defendants already under fraud investigation whose returns will be examined. |
| Global Trade & Commerce | Illicit transshipment, country-of-origin fraud, undervaluation of imports to evade duties, sanctions evasion, and forced labor in supply chains. | Importers, customs brokers, logistics providers, and companies with overseas manufacturing. |
| Corporate Misconduct | Fraud and economic crimes committed by organizations, with credit for voluntary self-disclosure, cooperation, and remediation. | Companies across every sector, along with the officers and employees whose conduct is attributed to them. |
Public Trust and Financial Integrity
The memo puts government program fraud first. It calls procurement fraud "a critical priority" and lists the theories by name: defective pricing, bid rigging, self-dealing, bribery, product substitution, and billing fraud. These cases are typically charged as wire fraud under 18 U.S.C. § 1343, false claims under 18 U.S.C. § 287, or major fraud against the United States under 18 U.S.C. § 1031, and they often run parallel to civil False Claims Act exposure.
Benefit and grant programs come next. The memo names student loans, child care, veterans' benefits, nutritional supplements, disaster relief, and small business programs, and it states that "lax oversight" of these programs "has come to an end." One line stands out. The memo asserts that bad actors exploiting these programs were "often foreign nationals." Expect charging decisions, detention arguments, and immigration consequences to reflect that framing.
Health Care
Health care fraud has been the federal government's largest fraud docket for two decades, and the memo keeps it there. It cites national health expenditures growing from over $3 trillion toward over $7 trillion annually, with an estimated 3 to 10 percent lost to fraud. The named targets are familiar: telemedicine, Medicare and Medicaid billing, opioid and controlled substance diversion, home health and hospice, and deceptive marketing.
The operational commitment is the real news. The Division absorbed DOJ's Health Care Fraud Unit and its nine strike forces operating across 27 federal districts, and the memo pledges to "supercharge" that model with greater resources, data analytics, and technology, prosecuting schemes involving hundreds of millions of dollars in losses along with the money laundering and tax crimes that accompany them. The Strike Force model already produced the 2025 national takedown charging 324 defendants in schemes involving more than $14.6 billion in intended loss. A supercharged version of that machine, run by a dedicated division, means more data-driven cases opened against providers whose billing profiles deviate from their peers. Charges in this space typically proceed under 18 U.S.C. § 1347 and the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b).
Internal Revenue
The Division has its own Tax Section, and the memo treats criminal tax enforcement as "an integral part" of its mandate. The named targets are return preparers who put false claims on clients' returns, taxpayers who conceal income, and promoters who sell abusive schemes. These cases are charged as tax evasion under 26 U.S.C. § 7201 and false returns under 26 U.S.C. § 7206.
The more consequential passage is about stacking. The memo observes that fraudsters who steal from government programs "simultaneously violate our internal revenue laws," and it commits to an "all-tools response" pairing criminal tax charges with data analytics and financial forensics. In practice, that means a health care or procurement fraud target can expect the government to examine every return filed during the scheme. Tax counts add exposure, complicate plea negotiations, and give the government a second theory when the fraud counts are contested.
Global Trade and Commerce
Trade fraud is the newest priority and the one most likely to surprise businesses that have never faced criminal scrutiny. The memo names illicit transshipment, country-of-origin fraud, undervaluation of imports to evade duties, sanctions evasion, and forced labor in supply chains. It commits the Division to lead a cross-agency Trade Fraud Task Force focused on "systemic, high-impact noncompliance."
The criminal statutes are older than most importers realize. Entry of goods by false statements is a felony under 18 U.S.C. § 542, and smuggling is charged under 18 U.S.C. § 545. Goods made with forced labor are barred from entry under 19 U.S.C. § 1307. Tariff levels have turned duty evasion into a high-dollar crime category, and conduct that was historically resolved through civil penalties at Customs and Border Protection is now a stated criminal priority for a 500-attorney division.
Corporate Misconduct
The memo closes its priorities with organizations. It states that the Division will hold accountable companies "that flaunt the law" while "rewarding those that voluntarily self-disclose, cooperate, and remediate." A dedicated Corporate Enforcement Section will ensure that prosecutors apply the Department's corporate charging policies consistently, following the framework in the Justice Manual's Principles of Federal Prosecution of Business Organizations.
The memo also discloses that the Division has "a strong pipeline of ongoing corporate matters." Companies weighing whether to self-disclose conduct touching any of the five priorities should read that line carefully. The value of voluntary disclosure depends on beating the government to the facts. A division built on data analytics and interagency data sharing shortens that race.
Read the McDonald Memo as a staffing plan, an org chart, and a target list. A division of 500 attorneys with reduced supervisory layers, embedded data scientists, and a mandate to charge quickly will generate more grand jury subpoenas, more search warrants, and more indictments across all five priority areas. The first sign of a Fraud Division case is usually a subpoena, an audit, a civil investigative demand, or an agent at the door. Each one arrives after the government has already worked the data.
What the Memo Does Not Change
Every priority in the memo still runs through the same elements the government has always had to prove. Fraud requires a scheme to defraud and specific intent. Health care fraud under 18 U.S.C. § 1347 requires knowing and willful conduct. Criminal tax cases require willfulness, which the Supreme Court defined in Cheek v. United States, 498 U.S. 192 (1991), as the voluntary, intentional violation of a known legal duty. For prescribers, Ruan v. United States, 597 U.S. 450 (2022), requires the government to prove the physician subjectively knew or intended to act outside authorized medical practice. Customs felonies require knowledge of the false statement.
Data analytics cannot supply that proof. A billing outlier shows that a provider's numbers diverge from a benchmark. It says nothing about what anyone believed. An undervalued customs entry can reflect a broker's error or a good-faith classification dispute. A tax deficiency can be negligence. The memo builds a faster machine for opening cases. The burden of proof stays exactly where it has always been, and the distance between an anomaly and a crime is where these cases are defended.
Frequently Asked Questions
What is the DOJ National Fraud Enforcement Division?
The National Fraud Enforcement Division is a new component of the Department of Justice, announced by President Trump in 2026 and dedicated to a single mission: prosecuting fraud in the United States, no matter its size or complexity. It is the first DOJ division devoted exclusively to fraud.
Under the August 13, 2026 McDonald Memo, the Division will reach approximately 500 attorneys and staff by August 24, 2026, with continued growth planned for two years. Its structure includes specialized litigating sections for health care fraud, public trust and financial integrity, tax, global trade, and corporate enforcement, supported by asset recovery attorneys, appellate counsel, a privilege review team, criminal investigators, and a National Fraud Detection Center. Its prosecutors deploy nationwide and work alongside U.S. Attorneys' Offices.
What are the Fraud Division's enforcement priorities under the McDonald Memo?
The memo names five priorities: (1) public trust and financial integrity, covering procurement fraud and fraud on benefit and grant programs; (2) health care, covering telemedicine, Medicare and Medicaid fraud, controlled substance diversion, home health and hospice schemes, and deceptive marketing; (3) internal revenue, covering false return preparation, concealed income, and abusive tax promotions; (4) global trade and commerce, covering transshipment, country-of-origin fraud, duty undervaluation, sanctions evasion, and forced labor; and (5) corporate misconduct.
The memo directs prosecutors to focus on schemes threatening the health, safety, security, and prosperity of Americans, with particular attention to the elderly, children, and the sick or disabled.
How does the Fraud Division use data analytics to identify targets?
The McDonald Memo commits the Division to cutting-edge data analysis, a cross-disciplinary team of data scientists, and a National Fraud Detection Center. It describes new interagency partnerships that break down data barriers between DOJ, federal law enforcement, executive agencies, and state and local partners.
In practice, the government runs claims data, loan data, customs entries, and tax filings through analytics to flag statistical outliers, then opens investigations of the flagged entities. An outlier report identifies a statistical anomaly. Intent has to be proven separately. The methodology, the benchmark population, and the clinical or commercial explanations for the pattern are all open to challenge, and they are usually the first battleground in a data-driven case.
Why does the memo pair tax charges with fraud charges?
The memo observes that defendants who steal from government programs often violate the internal revenue laws at the same time, because scheme proceeds are rarely reported as income. It commits the Division to an all-tools response that pairs criminal tax enforcement with fraud prosecution through its dedicated Tax Section.
Tax counts under 26 U.S.C. § 7201 and 26 U.S.C. § 7206 give the government independent theories of liability, additional statutory exposure, and leverage in plea negotiations. A target of any Fraud Division investigation can expect the returns filed during the alleged scheme to be examined.
Does a Fraud Division investigation mean criminal charges are certain?
No. Every priority in the memo still requires proof of criminal intent beyond a reasonable doubt. Health care fraud under 18 U.S.C. § 1347 requires knowing and willful execution of a scheme to defraud. Criminal tax charges require the intentional violation of a known legal duty. Customs felonies require knowledge of the falsity.
Billing errors, classification disputes, good-faith reliance on professional advice, and negligence are not federal crimes. Many investigations close without charges, resolve civilly, or narrow substantially once the government confronts contemporaneous documentation showing good-faith conduct. The stage between subpoena and indictment is where the outcome is most often determined.
What is the National Enforcement Section and the task force incubation program?
Under the memo, new Fraud Division attorneys typically begin in the National Enforcement Section, where they receive training and prosecute cases across the Division's entire portfolio before specializing. The memo describes this as a best-in-class talent pipeline for white-collar prosecutors.
The task force incubation program launches new enforcement initiatives led by emerging Division leaders. The practical significance is throughput. A division that trains prosecutors across every fraud type and then spins up dedicated task forces is structured to open new categories of cases quickly, in the way the Health Care Fraud Strike Force model scaled from a single district to a nationwide operation.
What is government procurement fraud?
Procurement fraud is fraud in the award or performance of government contracts. The McDonald Memo lists the principal theories: defective pricing, bid rigging, self-dealing, bribery, product substitution, and billing fraud. The memo calls prosecuting procurement fraud a critical priority because these schemes affect the quality of government services and can threaten national security and military readiness.
Criminal exposure typically arises under the wire fraud statute, the false claims statute at 18 U.S.C. § 287, and the major fraud statute at 18 U.S.C. § 1031. Parallel civil False Claims Act liability, suspension, and debarment often run alongside the criminal case, so a contractor's defense must account for all three tracks at once.
What health care fraud schemes will the Fraud Division prioritize?
The memo names telemedicine programs, Medicare and Medicaid fraud, controlled substance diversion, home health and hospice schemes, and companies that deceptively market unsafe products or services. It commits to prosecuting schemes involving hundreds of millions of dollars in losses, along with the associated money laundering and tax crimes. The Division absorbed DOJ's Health Care Fraud Unit and its nine strike forces, which operate across 27 federal districts and have charged more than 6,200 defendants who collectively billed federal programs and private insurers more than $45 billion since 2007.
The memo pledges to supercharge that strike force model with greater resources, data analytics, and technology. The model produced the 2025 national takedown charging 324 defendants in schemes involving more than $14.6 billion. The firm's attorneys tried 17 federal jury trials in health care fraud cases at DOJ's Fraud Section involving over $2.8 billion in alleged false claims, and Scott Armstrong served as lead trial counsel in the Fraud Section's first-ever use of data analytics to investigate, charge, and try a health care case. Providers whose billing deviates from peer benchmarks now face the same data-driven scrutiny at far greater scale.
How do the Fraud Division's priorities affect hospice providers?
The memo names hospice schemes as a direct target, stating that they impact vulnerable elderly Americans and erode patient care. Enforcement was already severe. Under the CMS Provisional Period of Enhanced Oversight, 817 newly enrolling hospices in California, Arizona, Nevada, and Texas had been subjected to prepayment review by December 2025, and CMS revoked the Medicare enrollment of 181 of them, a 22 percent revocation rate. CMS expanded the program to Georgia and Ohio and referred 343 cases representing $3.4 billion in suspect billing to law enforcement in 2025. In the Merida Group case, the owner of a Texas hospice chain received 20 years in federal prison for a $150 million scheme.
The prosecution theory turns on the certification of terminal illness with a six-month prognosis under 42 U.S.C. § 1395f(a)(7). The government builds these cases from live discharge rates and length-of-stay data before interviewing a single patient. Terminal prognosis is a matter of clinical judgment. A patient who outlives a prognosis is not evidence of fraud, and aggregate discharge statistics say nothing about any individual certification. The firm's hospice fraud defense practice defends owners, medical directors, certifying physicians, nurses, and marketers nationwide, drawing on 17 health care fraud jury trials at DOJ's Fraud Section involving over $2.8 billion in alleged false claims.
What does the memo mean for home health agencies?
The memo puts home health schemes on the Division's target list, and the data infrastructure is already running. CMS suspended $5.7 billion in suspected fraudulent Medicare payments in 2025, revoked the billing privileges of 5,586 providers and suppliers, and sent 372 fraud referrals covering $3.7 billion in billing to law enforcement. The government's theories center on homebound status certifications, medical necessity, inflated OASIS assessments that drive reimbursement under the Patient-Driven Groupings Model, and kickbacks for referrals.
Scott Armstrong tried four federal home health fraud jury trials in the Southern District of Texas as a DOJ Fraud Section prosecutor. Those cases involved over $57 million in false claims against physicians and registered nurses who signed false certifications, fabricated visit records, and paid kickbacks for referrals. Each ended in conviction at trial. Drew Bradylyons supervised the Healthcare Fraud Unit's Miami Strike Force in South Florida, the historic epicenter of home health enforcement. The firm's home health fraud defense practice now puts that experience to work for agency owners, directors of nursing, certifying physicians, and clinical staff, challenging the government's outlier analytics and building the clinical record that supports homebound status and medical necessity.
What does the memo mean for telemedicine companies and telehealth prescribers?
Telemedicine leads the memo's list of health care targets, and DOJ has stated that telemedicine fraud schemes present grave fraud risks. The 2025 national takedown charged 49 defendants in telemedicine and genetic testing schemes involving $1.17 billion in Medicare loss. Done Global is the defining platform-level case. In July 2026, its founder was sentenced to 72 months in prison and its clinical president to 24 months for a $90 million scheme that used the platform's technology, compensation structure, and clinical protocols to unlawfully distribute over 37 million Adderall pills. HHS-OIG's 2022 Special Fraud Alert publishes the red flags the government uses to select targets: limited patient contact, volume-based practitioner compensation, and restricted treatment offerings.
The firm built these cases at DOJ before defending them. Its attorneys prosecuted a $1 billion fraud scheme involving a telemedicine platform that generated false doctors' orders billed to Medicare, oversaw a nationwide enforcement action targeting more than $100 million in medically unnecessary durable medical equipment prescribed through telehealth, and served as lead counsel in a $60 million DME scheme procured through kickbacks. The firm's telemedicine fraud defense practice defends platform operators, MSO executives, physicians, and nurse practitioners by establishing genuine practitioner-patient relationships, documented clinical oversight, and compensation structures that hold up against the Anti-Kickback Statute.
How will the Fraud Division prosecute opioid diversion and controlled substance cases?
The memo identifies the illegal prescribing and dispensing of opioids and other controlled substances as a core priority, and the Division inherits a mature strike force apparatus. Scott Armstrong served as the Director of DOJ's Appalachian Regional Prescription Opioid Strike Force (ARPO), leading the team of prosecutors and data analysts that charged more than 120 defendants collectively responsible for prescribing over 115 million controlled substance pills across 10 federal districts in six states. He tried prescription drug diversion cases as lead trial counsel, including the Fraud Section's first data-analytics case, which convicted a physician and clinic owner of conspiring to unlawfully dispense over 2 million opioid pills. Drew Bradylyons was a leading member of ARPO and supervised strike force prosecutors handling complex controlled substances cases in South Florida.
ARPO's successor, the Prescription Strike Force, now targets diversion of all controlled substances nationally from hubs in Nashville and Fort Mitchell, Kentucky. In the 2025 takedown, 74 defendants, including 44 medical professionals, were charged with diverting more than 15 million pills, and the DEA filed 93 parallel administrative cases seeking revocation of prescribing authority. These cases run on DEA ARCOS data, prescription monitoring programs, undercover operations, and cooperating patients. Under Ruan v. United States, the government must prove the prescriber subjectively knew or intended to act outside authorized medical practice, so good faith is a complete defense. The firm's controlled substances diversion defense practice defends physicians, pharmacists, clinic owners, and telehealth companies, and coordinates the parallel DEA registration proceedings that run beside the criminal case.
What is trade fraud and customs evasion under federal criminal law?
Trade fraud covers schemes to evade customs duties or import restrictions. The memo identifies illicit transshipment, which routes goods through third countries to disguise their origin; country-of-origin fraud; undervaluation of imports to reduce duties; sanctions evasion; and supply chains that use forced labor, which bars the goods from entry under 19 U.S.C. § 1307.
Criminal charges typically proceed under 18 U.S.C. § 542 for entry by false statements and 18 U.S.C. § 545 for smuggling, alongside wire fraud and conspiracy. The Division's cross-agency Trade Fraud Task Force targets systemic, high-impact noncompliance, which moves conduct historically handled through civil customs penalties into criminal courtrooms.
How does the memo treat corporate voluntary self-disclosure?
The memo states that the Division will hold accountable organizations that flaunt the law while rewarding those that voluntarily self-disclose, cooperate, and remediate. A dedicated Corporate Enforcement Section will apply the Department's corporate charging policies, set out in the Justice Manual, fairly and consistently.
The value of self-disclosure depends on timing. Credit flows to companies that report before the government learns of the conduct through other means. Because the Division is built on data analytics and interagency data sharing, and because the memo discloses a strong pipeline of ongoing corporate matters, the window in which a disclosure is truly voluntary is narrower than it was under prior enforcement structures. The disclosure decision requires a careful, privileged assessment of what the government can already see.
What experience does Armstrong & Bradylyons PLLC bring to Fraud Division investigations?
The lawyers who understand the space between an anomaly and a crime are the ones who built the government's playbook. Scott Armstrong served as an Assistant Chief in DOJ Fraud Section's Market Integrity and Major Frauds Unit and as a leading trial attorney in its Healthcare Fraud Unit. He tried sixteen federal jury trials, including nine health care fraud trials, with lead responsibility for cases totaling over $600 million in false claims. He directed the Appalachian Regional Prescription Opioid Strike Force and co-led one of the first COVID-era PPP fraud prosecutions.
Drew Bradylyons served as an Assistant Chief supervising the Healthcare Fraud Unit's Miami Strike Force and as Chief of the Financial Crimes and Public Corruption Unit at the U.S. Attorney's Office for the Eastern District of Virginia, where he supervised parallel criminal, civil, and administrative fraud investigations involving more than $1 billion in claims. Together the firm's attorneys have tried 25 federal jury trials in complex fraud cases. The strike force deployment, data-first case building, and parallel-track referrals the McDonald Memo institutionalizes are the methods they ran from the inside.
Where does the firm defend Fraud Division investigations and prosecutions?
Armstrong & Bradylyons PLLC is based in Washington, D.C., where the Fraud Division is headquartered, and defends individuals and companies in federal fraud investigations nationwide. The McDonald Memo deploys Division prosecutors across the country to work with U.S. Attorneys' Offices, so cases will be charged in every federal district where the data points.
The firm appears in federal district courts across the United States. It represents targets, subjects, and witnesses from the first subpoena or agent contact through grand jury practice, charging negotiations, trial, and appeal, in health care, procurement, tax, trade, and corporate matters, wherever the Division brings them.
Facing a National Fraud Enforcement Division Investigation?
Armstrong & Bradylyons PLLC defends individuals and companies in federal fraud investigations and prosecutions nationwide, across every priority named in the McDonald Memo. As former DOJ Fraud Section prosecutors, Scott Armstrong and Drew Bradylyons built, supervised, and tried the strike force and data-driven fraud cases the new Division is designed to scale.
