DOJ Creates the National Fraud Enforcement Division: What It Means for Federal Procurement Fraud Defense
On April 7, 2026, Acting Attorney General Todd Blanche signed a memorandum establishing the National Fraud Enforcement Division, a new litigating division that consolidates DOJ’s major fraud prosecution units under a single command. The division immediately assumes operational control of the Criminal Division’s Health Care Fraud Unit, Market, Government, and Consumer Fraud Unit, and Tax Section. Each of the 93 U.S. Attorney’s Offices must detail an experienced prosecutor within 21 days. The FBI has been directed to increase agents, analysts, and forensic accountants for fraud investigations.
Criminal procurement fraud prosecutions are accelerating. In the past four months, DOJ has secured a guilty plea in a $37 million Air Force bid-rigging scheme, a five-year federal prison sentence for Navy fuel supply fraud, a grand jury indictment for NATO construction bribery, and a grand jury indictment for cybersecurity fraud against the U.S. Army. These cases were investigated by multi-agency teams through the Procurement Collusion Strike Force and DOJ’s Fraud Section.
The National Fraud Enforcement Division
On April 7, 2026, Acting Attorney General Todd Blanche announced the creation of the National Fraud Enforcement Division at DOJ headquarters. The rhetoric was pointed. Blanche characterized fraud against federal programs as a national crisis costing over $1 trillion annually, stated that DOJ has over 8,000 fraud matters underway, and warned that figure represents a fraction of total illicit activity. That framing matters. It signals that DOJ intends to treat its current caseload as a starting point, not a ceiling.
The division is not advisory. It is a litigating division with operational control over criminal prosecutors. The memorandum Blanche signed makes this explicit: the Assistant Attorney General for the National Fraud Enforcement Division shall establish priorities and direct the allocation of resources within the units it absorbs. The Senate confirmed Colin McDonald as the first Assistant Attorney General leading the division. Blanche described him as a veteran prosecutor with a career dedicated to public safety.
What the Division Absorbs
The memorandum directs the immediate transfer of three Criminal Division units. The Health Care Fraud Unit is the Fraud Section’s largest litigating unit. It operates nine Strike Forces across 26 federal districts and charged 195 individuals in 2025 in schemes involving over $15 billion in alleged losses. The Market, Government, and Consumer Fraud Unit handles criminal procurement fraud, securities fraud, customs and tariff evasion, and consumer fraud. It charged 62 individuals and resolved five corporate criminal matters in 2025. The Tax Section handles criminal tax fraud. Together, these units represent the core of DOJ’s criminal fraud prosecution capability.
Within 30 days, the Office of Legal Policy must recommend which additional criminal resources should be realigned. The memorandum establishes a presumption that any criminal unit with a similar mission will be absorbed. Personnel transfers must be completed within 90 days.
93 Designated Fraud Prosecutors
Within 21 days, each U.S. Attorney’s Office must designate an experienced prosecutor to be detailed in place to the division. That prosecutor will administer the division’s mission in their district. The memorandum also directs each U.S. Attorney to ensure that fraud investigations beyond the detailee’s work are adequately staffed.
This is a structural change. Under the prior model, criminal fraud cases were prosecuted by the Fraud Section working with individual U.S. Attorney’s Offices. Under the new model, every federal district has a designated point of contact reporting to a centralized division. That means faster referrals, more consistent charging decisions, and coordinated enforcement across jurisdictions.
The National Fraud Detection Center
The memorandum directs the new division to establish a National Fraud Detection Center in coordination with agency Inspectors General and the Task Force to Eliminate Fraud. The center will be a permanent, prosecutor-led, multi-agency data analytics operation dedicated to identifying fraud and generating leads for investigators. The FBI has been separately directed to increase the number of agents, analysts, and forensic accountants available for fraud cases. DOJ’s grant-making components are directed to establish programs that enable state and local prosecutors to join the mission as Special Assistant U.S. Attorneys.
The Task Force to Eliminate Fraud
The National Fraud Enforcement Division operates within a broader enforcement structure. On March 16, 2026, the President signed an executive order establishing the Task Force to Eliminate Fraud. The Vice President chairs the Task Force. It includes DOJ, Treasury, HHS, the Department of Education, HUD, the Department of Labor, DHS, the Small Business Administration, and multiple Inspectors General.
The Task Force directs agencies to share data, coordinate investigations, and develop minimum anti-fraud requirements for entities that receive federal funds. Together, the Task Force and the new division represent a two-level enforcement architecture: inter-agency coordination at the Task Force level, and centralized criminal prosecution at the division level.
Recent Federal Procurement Fraud Cases
Four recent cases illustrate the range of conduct DOJ is targeting and the investigative tools it is using. Understanding the government’s theories in these cases is essential for identifying where those theories are strong, where they are vulnerable, and what defense strategies are available.
Air Force IT Contract Bid Rigging: $37 Million (April 2, 2026)
Alan Hayward James, a former Air Force Master Sergeant, pleaded guilty in the District of Hawaii to conspiracy to commit wire fraud, bribery, and conspiracy to rig bids. The scheme ran for nine years, from April 2016 to April 2025.
According to the plea agreement, James and his co-conspirators inflated IT contracts for U.S. Pacific Air Forces by at least $37 million. James directed co-conspirators on how much to bid, eliminating competition while maintaining the appearance of a legitimate tender. Excess contract funds were routed through shell companies and disguised as false salaries, including payments to family members of co-conspirators. A ledger recovered by investigators documented payments to a federal official labeled “Godfather.” James referred to his own parents in the ledger as “Capone M” and “Capone D.” Part of the diverted funds paid for an all-expenses-paid stay at a luxury resort in Hawaii.
James agreed to pay over $1.4 million in restitution. He faces up to 20 years on the wire fraud conspiracy count, up to 15 years for bribery, and up to 10 years for bid rigging. Sentencing is pending.
Over thirty-seven million dollars. That’s how much the U.S. Air Force overpaid because of the scheme that the defendant admitted to, under oath and in open court.
Acting Deputy Assistant Attorney General Daniel Glad, DOJ Antitrust Division, April 2, 2026The $37 million figure is the government’s calculation of inflated contract costs. At sentencing, the defense will have the opportunity to challenge that number. Loss calculations in bid-rigging cases depend on assumptions about what the contracts would have cost under genuinely competitive conditions. Those assumptions are contestable.
Navy Fuel Supply Fraud: Five Years in Federal Prison (April 8, 2026)
Jasen Butler was sentenced to 60 months in federal prison after a jury convicted him on 34 counts of wire fraud, money laundering, and forgery. Butler owned Independent Marine Oil Services LLC and was contracted to supply fuel to U.S. Navy and Coast Guard ships through the SEA Card Program, which enables warships to purchase fuel for military operations worldwide.
The evidence at trial showed that Butler submitted falsified invoices and fabricated wire transfer memos claiming fuel purchases for warships including the USS Patriot at ports in Saudi Arabia, Singapore, and Croatia. The fuel was never purchased. Butler collected over $4.5 million in payments for fuel that did not exist. When Navy officials began scrutinizing his company, Butler adopted a false name and feigned employment by a fictitious fuel division of a different company to conceal his identity. He used the fraud proceeds to purchase multi-million dollar properties in Florida and Colorado. The court ordered criminal forfeiture of those properties.
The defendant stole millions of dollars from our military with a fake job, fake identity, and fake invoices. This administration takes defrauding the American military seriously.
Acting Attorney General Todd Blanche, April 8, 2026The Butler case is the kind of fact pattern that produces severe sentences. The false identity, the fabricated documents, and the personal enrichment gave the government overwhelming evidence of intent and concealment. Not every procurement fraud allegation involves facts this stark. Many cases turn on ambiguous contract terms, disputed compliance certifications, and legitimate business judgments that the government recharacterizes after the fact.
NATO and Military Construction Bribery (January 25, 2026)
A federal grand jury in the District of Columbia indicted Bahadir Hatipoglu, a Turkish defense contractor, and Ralf Grywnow, a former NATO procurement official, for bribery in connection with U.S. military and NATO construction contracts.
According to the indictment, Hatipoglu bribed Grywnow with cash, a romantic encounter with a woman in Dubai, and assistance constructing and furnishing a house in Poland. In exchange, Grywnow allegedly provided Hatipoglu with falsified performance reviews that favorably appraised his companies’ work, preferential treatment in overseeing active contracts, and confidential information related to bids for NATO construction contracts. The falsified reviews were then used to secure additional contracts with the U.S. military.
DOJ’s Fraud Section is prosecuting the case with support from the Defense Criminal Investigative Service and Army Criminal Investigation Division.
Integrity in federal contracting is vital to ensuring a fair competitive process and protecting the public fisc. These charges demonstrate the department’s mission to eliminate corruption that skews procurement contracts away from the best bidder and toward those who can bribe insiders.
Assistant Attorney General A. Tysen Duva, DOJ Criminal Division, January 25, 2026These are allegations in an indictment. Both defendants are presumed innocent. The defense in a bribery case often turns on whether payments were compensation for legitimate services rather than bribes to influence official acts. That distinction is fact-intensive and often contested at trial.
Government Contractor Cybersecurity Fraud (December 10, 2025)
A federal grand jury in the District of Columbia indicted Danielle Hillmer, a senior manager at a Virginia-based government contractor, for major government fraud under 18 U.S.C. section 1031, wire fraud, and obstruction of a federal audit. The indictment contains allegations. Hillmer has not been convicted.
According to the indictment, from approximately March 2020 through November 2021, Hillmer oversaw assessments and continuous monitoring of a cloud platform used by at least six federal agencies, including the U.S. Army and the departments of State and Veterans Affairs. The platform was marketed as a secure environment for federal agencies. Hillmer allegedly concealed the platform’s failure to implement required security controls under the Federal Risk and Authorization Management Program (FedRAMP) and Department of Defense standards. She allegedly instructed others to hide the true state of the system during testing and demonstrations and submitted authorization materials she knew contained materially false information to obtain and maintain government contracts.
A private chat recovered by investigators captured an employee telling Hillmer that the company had “dodged the MFA implementation bullet for now.” Hillmer responded with a fingers-crossed emoji. She faces up to 20 years on each wire fraud count and up to 10 years for major government fraud. The cybersecurity fraud theory is relatively new in criminal enforcement. Whether partial compliance with a cybersecurity framework that contemplates staged implementation constitutes criminal fraud is a question that has not been extensively tested at trial.
The Criminal Statutes Used in Procurement Fraud Cases
| Statute | Elements | Maximum Penalties |
|---|---|---|
| 18 U.S.C. § 1031 Major Fraud Against the United States | Knowingly executing or attempting a scheme to defraud the United States in a procurement, grant, or contract valued at $1 million or more. | 10 years per count. Fine up to $1 million, or up to $5 million with enhanced factors. Seven-year statute of limitations. |
| 18 U.S.C. § 1343 Wire Fraud | Using interstate wire communications in furtherance of a scheme to defraud. Applied to virtually any procurement fraud involving electronic communication. | 20 years per count. Fine up to $250,000. |
| 18 U.S.C. § 371 Conspiracy to Defraud the United States | Agreement between two or more persons to defraud the United States, plus an overt act. Does not require the fraud to succeed. | 5 years. Fine up to $250,000. |
| 18 U.S.C. § 201 Bribery of Public Officials | Offering, giving, or promising anything of value to a federal official to influence an official act, including contract awards. | 15 years. Fine up to three times the value of the bribe. |
| 41 U.S.C. § 8702 Anti-Kickback Act (Procurement) | Providing, soliciting, or accepting a kickback in connection with a government contract or subcontract. | 10 years. Fine up to $5 million for individuals, $25 million for organizations. |
| 15 U.S.C. § 1 Sherman Act (Bid Rigging) | Agreement among competitors to rig bids, fix prices, or allocate markets in government procurement. A per se violation of the Sherman Act. | 10 years for individuals. Fine up to $1 million for individuals, $100 million for corporations. |
These statutes are routinely charged together. In the Air Force bid-rigging case, James was charged with wire fraud conspiracy, bribery, and Sherman Act bid rigging. In the Navy fuel case, Butler was convicted of wire fraud, money laundering, and forgery. Each statute captures a different dimension of the conduct. The cumulative maximum sentencing exposure is high but turns on the loss amount proven at sentencing under the U.S. Sentencing Guidelines.
Key Defenses in Federal Procurement Fraud Cases
Federal procurement fraud cases are defensible at every stage. But the defense must be precise about which elements are in dispute. The government’s burden at trial in a criminal procurement fraud case is proof beyond a reasonable doubt on every element of the charged offense. In wire fraud and major fraud cases, two elements are most frequently contested: falsity and materiality. In bid rigging and bribery cases, the disputed element is often the nature of the agreement or payment. In all cases, intent is the overarching question. A defense that addresses each disputed element at the outset of the investigation is far more effective than one assembled after an indictment.
Falsity: Was the Representation Actually False?
Federal pattern jury instructions for wire fraud require the government to prove that the defendant knowingly participated in a scheme to defraud “by means of false or fraudulent pretenses, representations, or promises.” The Fifth Circuit Pattern Jury Instructions define both terms.
A “scheme to defraud” means any plan, pattern, or course of action intended to deprive another of money or property or bring about some financial gain to the person engaged in the scheme. A representation is “false” if it is known to be untrue or is made with reckless indifference as to its truth or falsity. A representation is also “false” if it constitutes a half truth, or effectively omits or conceals a material fact, provided it is made with the intent to defraud.
That definition does real work for the defense. The government must prove the defendant knew the statement was untrue or acted with reckless indifference to its truth. A statement that the defendant genuinely believed to be accurate at the time it was made does not satisfy this standard. Nor does a statement that reflects a reasonable interpretation of an ambiguous contract term.
In procurement fraud cases, the government must identify the particular statement, certification, invoice, or submission it contends was false and prove it meets this definition. The falsity element is where many procurement fraud theories are most vulnerable.
In procurement fraud cases, the falsity element is contested on several recurring grounds.
Contract ambiguity. Federal contracts are dense documents with specifications that can be interpreted in more than one reasonable way. An individual who interprets an ambiguous specification in good faith has not made a false statement. That person has made a judgment call. The government must prove the specification had only one reasonable meaning and that the submission was inconsistent with it. Where the contract language supports more than one reading, the falsity element fails.
This issue arises frequently in defective pricing cases, where the government argues that cost or pricing data submitted during negotiations was not “accurate, current, and complete” under the Truth in Negotiations Act. Whether data was “complete” often turns on what was required to be disclosed, which itself depends on the contract’s terms.
Estimates and professional judgment. Cost data in procurement contracts frequently involves estimates, projections, and assumptions about future labor, materials, and overhead. An estimate that proves wrong is not a false statement. The government must show that the estimate was knowingly unreasonable at the time it was submitted. If the methodology was standard in the industry and the inputs were defensible, the estimate is not false even if it overstated costs in hindsight.
Compliance certifications. The cybersecurity fraud indictment illustrates this issue. The government alleges that Hillmer certified compliance with FedRAMP and DOD security controls when the platform did not actually meet those standards. The defense question is whether the individual’s certification was false or whether the platform was in partial compliance with a standard that permits staged implementation. Many federal cybersecurity frameworks contemplate Plans of Action and Milestones that allow operations to continue while identified gaps are remediated. If known deficiencies were disclosed through an authorized remediation process, the certification may not have been false. The falsity analysis turns on exactly what the individual represented and exactly what the applicable standard required.
Product and performance specifications. In cases alleging that goods or services did not meet specifications, the defense examines the specification itself. If the specification defined performance requirements in ranges rather than absolutes, delivery within an acceptable range is not a false statement. Government acceptance of the deliverable after inspection does not legally bar a prosecution, but it is probative evidence that the goods or services conformed to the specification as understood by the contracting officer at the time. An individual who signed off on a delivery in good-faith reliance on the specification’s plain language has a defense to falsity.
Materiality: Would the Misrepresentation Have Influenced the Government’s Decision?
Even where the government can prove that a statement was false, it must also prove that the false statement was material. In Neder v. United States, 527 U.S. 1 (1999), the Supreme Court held that materiality is an element of wire fraud and mail fraud. The Court adopted the common-law definition: a false statement is material if it has a natural tendency to influence, or is capable of influencing, the decision of the decisionmaking body to which it was addressed.
Federal pattern jury instructions track this language. In wire fraud cases, judges instruct juries that the government must prove the defendant used material misrepresentations. A misrepresentation is material if it would have had a natural tendency to influence, or was capable of influencing, the government’s contracting or payment decision. The test is objective. It examines the intrinsic nature of the false statement, not whether the government actually relied on it. The government does not need to prove actual reliance. But it must prove that the type of information at issue was the type capable of affecting the decision.
That standard is the government’s burden. It is also the defense’s opportunity. Several recurring fact patterns create viable materiality challenges in procurement fraud cases.
Ancillary certifications versus core contract terms. Not every false statement in a procurement transaction is material. Federal contracts contain hundreds of certifications, representations, and compliance acknowledgments. A false statement on an ancillary administrative certification that has no bearing on the government’s decision to award the contract or approve a payment may lack the natural tendency to influence that the statute requires. The defense must isolate the specific statement the government alleges was false and demonstrate that the statement concerned a peripheral matter, not a material term of the contract. The government must connect the alleged misrepresentation to the contracting decision. A generalized theory that any false statement is inherently material because the government expects honesty does not satisfy the jury instruction.
Government receipt of the bargained-for performance. Where the government received the goods or services it contracted for and those goods or services performed as intended, the nature of the alleged false statement may not support a finding of materiality. If the deliverable met specifications and the alleged misrepresentation related to a process, reporting, or administrative requirement rather than the substance of the deliverable, the defense can argue that the misrepresentation was not the type of information capable of influencing the government’s decision to pay. This is strongest where the deliverable met all substantive specifications and the false statement concerned a collateral matter.
The nature of the information in context. The objective test asks whether the false statement, by its nature, was capable of influencing the relevant decision. In defective pricing cases, false cost data submitted during contract negotiations is inherently the type of information that influences a pricing decision. That makes the materiality element easier for the government to prove. In cybersecurity compliance cases, the question is closer. If the individual misrepresented compliance with a specific security control that the contracting officer had identified as a condition of the authorization to operate, the statement is likely material. If the misrepresentation concerned a control that was already subject to an approved remediation plan, the defense has a stronger argument that the statement was not capable of influencing the government’s decision to continue performance.
Intent: Knowledge, Willfulness, and Good Faith
The criminal fraud statutes applicable to procurement cases each require proof of a culpable mental state. Wire fraud under section 1343 and major fraud under section 1031 require proof that the defendant acted with specific intent to defraud. The Anti-Kickback Act requires proof that the defendant acted knowingly and willfully. Bribery under section 201 requires corrupt intent. Bid rigging under Section 1 of the Sherman Act is distinct: it is a per se offense, and the government need only prove a knowing agreement among competitors to rig bids. It does not require a separate showing of intent to defraud. For the fraud-based charges that dominate most procurement cases, however, the intent element is the highest burden the government faces. Billing errors, accounting mistakes, and good-faith contract disputes do not satisfy it.
Intent is contested on several grounds in procurement cases.
Good-faith reliance on professional advice. An individual who relied on the advice of legal counsel, accountants, or compliance consultants in making a representation can raise that reliance to negate the intent element. The defendant bears the initial burden of producing evidence to support the defense: that the individual sought advice, provided complete and accurate information to the advisor, received advice, and followed it in good faith. Once that evidence is before the jury, the government must still prove intent to defraud beyond a reasonable doubt. The reliance evidence directly undercuts the government’s ability to meet that burden.
Ambiguity negating intent. Where contract terms are ambiguous, an individual’s reasonable interpretation of those terms cannot support a finding of criminal intent. An individual who interpreted a specification one way, when the government later contends it meant something else, did not act with intent to defraud. The ambiguity itself negates the knowledge element.
Reliance on internal compliance clearance. An individual who flagged a question to the company’s compliance department, received approval, and acted in accordance with that approval has a strong defense to criminal intent. The logic is the same as advice of counsel: a person who sought internal guidance on whether conduct was permissible and was told it was did not act with knowledge that the conduct was unlawful. This defense is strongest when there is a paper trail. An email asking compliance whether a particular billing practice or certification is appropriate, a written response approving it, and evidence that the individual followed the guidance is difficult for the government to overcome on the intent element. The individual did not conceal the conduct. The individual surfaced it through the proper channel. That is the opposite of the behavior the government must prove.
Absence of concealment. In several of the recent cases, the government’s strongest evidence of intent was concealment. In the Navy fuel case, the defendant adopted a false identity. In the Air Force case, co-conspirators used coded names in a payment ledger. In the cybersecurity case, the defendant allegedly instructed colleagues to hide deficiencies during testing.
The government is increasingly proving intent through private messages recovered from ephemeral and encrypted messaging applications. Prosecutors obtain these messages through search warrants for iCloud backups, which often store message histories even from applications that use end-to-end encryption, and through forensic examination of seized physical devices. A single text message or chat exchange that reveals awareness of a false statement can be devastating at trial. The cybersecurity case illustrates this: the government’s indictment cites a private chat in which an employee told the defendant the company had “dodged the MFA implementation bullet for now.” That one exchange may be the most powerful piece of evidence in the case.
The defense response depends on context. Where the evidence shows no concealment, no use of encrypted channels to hide the substance of communications, and the individual’s conduct was transparent to the contracting officer, the inference of criminal intent is far weaker. Where private messages do exist, the defense must address them directly: the message may have been taken out of context, may reflect frustration rather than knowledge of fraud, or may be inconsistent with the individual’s other documented communications on the same subject.
Challenging the Government’s Loss Calculations at Sentencing
Sentencing in procurement fraud cases is driven by loss amount under the U.S. Sentencing Guidelines. A loss of $1.5 million adds 16 offense levels. A loss of $25 million adds 22 levels. These calculations can mean the difference between years in prison.
The government bears the burden of proving loss by a preponderance of the evidence at sentencing. Its calculation often overstates actual harm by treating the entire contract value as the loss amount rather than isolating the fraudulent component. In the Air Force bid-rigging case, the government alleged $37 million in inflated costs. Defense counsel can challenge both the methodology and the inputs underlying the government’s loss figure through forensic accounting evidence and expert testimony on what the contracts would have cost under genuinely competitive conditions.
The section 3553(a) factors also require the sentencing court to consider the nature and circumstances of the offense and the need to avoid unwarranted sentencing disparities, which can provide a basis for a sentence below the Guidelines range even where the loss amount is substantial.
Government Overreach in Parallel Proceedings
Individuals in the procurement space frequently face overlapping criminal, civil, and administrative proceedings. The government may pursue criminal charges against an individual while separately pursuing civil damages against the company and initiating suspension and debarment proceedings. Voluntary statements made in civil proceedings, audit responses, and administrative submissions are generally admissible in a parallel criminal case absent a specific grant of immunity or other negotiated protection.
An individual’s responses to agency audits, Inspector General subpoenas, and compliance questionnaires all carry risks if a parallel criminal investigation is active. The coordination now formalized at both the Task Force and National Fraud Enforcement Division levels makes this risk acute. Any response to a government inquiry must be evaluated for its impact on the individual across all active or potential proceedings before it is submitted.
The firm’s attorneys know how federal prosecutors build procurement fraud cases because they built them.
Scott Armstrong has tried 16 federal jury trials in complex white-collar cases in federal courts across the country. He served for nearly a decade at DOJ’s Fraud Section as an Assistant Chief in the Market Integrity and Major Fraud Unit, the same unit now absorbed into the National Fraud Enforcement Division.
Drew Bradylyons served as Chief of the Financial Crimes and Public Corruption Unit in the Eastern District of Virginia, one of the most active federal districts for procurement fraud given its proximity to the Pentagon and northern Virginia’s defense contractor base. In that role, Drew led and supervised prosecutions of frauds on the government, including procurement fraud and government contracting fraud. He spent over 12 years as a federal prosecutor, including approximately eight years at DOJ’s Fraud Section.
Frequently Asked Questions
What is the National Fraud Enforcement Division?
The National Fraud Enforcement Division is a new DOJ litigating division established by memorandum on April 7, 2026. It is led by Assistant Attorney General Colin McDonald. The division immediately assumes operational control of the Criminal Division’s Health Care Fraud Unit, Market, Government, and Consumer Fraud Unit, and Tax Section. Each of the 93 U.S. Attorney’s Offices must detail a prosecutor to the division within 21 days. The division oversees a new National Fraud Detection Center, a multi-agency data analytics operation that generates investigative leads. Acting Attorney General Blanche stated that DOJ has over 8,000 fraud matters underway.
What is bid rigging in government contracts?
Bid rigging is an agreement among competitors to manipulate the competitive bidding process for government contracts. It is a per se violation of Section 1 of the Sherman Act, meaning the agreement itself is the crime. Common forms include complementary bidding (submitting intentionally high bids so a designated competitor wins), bid suppression (agreeing not to bid), and bid rotation (taking turns as the low bidder). The Procurement Collusion Strike Force has trained tens of thousands of procurement officials to recognize collusion indicators. Bid rigging carries up to 10 years in prison for individuals and fines up to $1 million, which may be increased to twice the gain or twice the loss.
What is the Procurement Collusion Strike Force?
The Procurement Collusion Strike Force is a joint law enforcement initiative led by DOJ’s Antitrust Division created in November 2019. It combats bid rigging, price fixing, and market allocation in government procurement at all levels. The PCSF includes multiple U.S. Attorney’s Offices, the FBI, Defense Criminal Investigative Service, and agency Inspectors General. It conducts criminal enforcement and trains procurement officials and auditors to recognize collusion indicators. The PCSF operates alongside the new National Fraud Enforcement Division. The Antitrust Division is not absorbed into the new division. Recent PCSF prosecutions include a $37 million Air Force bid-rigging plea, a five-year prison sentence for Navy fuel fraud, and indictments for bid rigging in wildfire services and school equipment procurement.
What criminal statutes does DOJ use to prosecute procurement fraud?
18 U.S.C. section 1031 (Major Fraud Against the United States) applies to fraud involving contracts or federal assistance valued at $1 million or more and carries up to 10 years per count. 18 U.S.C. section 1343 (Wire Fraud) carries up to 20 years. 18 U.S.C. section 371 (Conspiracy to Defraud the United States) carries up to 5 years. Bribery under 18 U.S.C. section 201 carries up to 15 years. Bid rigging under the Sherman Act carries up to 10 years. The Anti-Kickback Act (41 U.S.C. section 8702) carries up to 10 years. These statutes are routinely charged together.
Can I go to prison for government contract fraud?
Yes. Federal procurement fraud is prosecuted as a felony. Individuals convicted of wire fraud face up to 20 years per count. Major fraud against the United States carries up to 10 years. Bid rigging carries up to 10 years. Bribery of a public official carries up to 15 years. In the April 2026 Navy fuel fraud case, the defendant was sentenced to 60 months in federal prison after a jury convicted him on 34 counts. The court also ordered criminal forfeiture of multi-million dollar properties in Florida and Colorado. Under the U.S. Sentencing Guidelines, the actual sentence is driven primarily by loss amount, the defendant’s role in the offense, and any obstruction of justice. DOJ is charging individuals personally in procurement fraud cases, including executives, program managers, military personnel, and subcontractor employees.
What is 18 U.S.C. section 1031, major fraud against the United States?
18 U.S.C. section 1031 criminalizes knowingly executing or attempting to execute a scheme to defraud the United States in connection with a procurement contract, grant, or other federal assistance valued at $1 million or more. The statute carries up to 10 years in prison per count and fines up to $1 million, which may be enhanced to $5 million. Section 1031 has a seven-year statute of limitations, longer than the standard five-year period for most federal crimes. The statute was used in the December 2025 cybersecurity fraud indictment, where a senior manager was charged with submitting materially false FedRAMP authorization materials to obtain and maintain government contracts for a cloud platform used by the U.S. Army and at least five other agencies.
How do federal procurement fraud investigations begin?
Most criminal procurement fraud investigations begin before the target knows an investigation exists. Common triggers include Inspector General audits of billing data, referrals from the Procurement Collusion Strike Force’s training programs for procurement officials, tips from cooperating witnesses or former employees, and wiretap evidence. Investigators increasingly obtain private messages from encrypted and ephemeral messaging applications through iCloud backup warrants and search warrants of seized devices. In the Air Force bid-rigging case, investigators recovered internal ledgers documenting bribe payments. In the Navy fuel case, Navy officials detected billing anomalies before the defendant adopted a false identity to evade scrutiny. In the cybersecurity case, private employee chat messages were recovered showing awareness that required security controls had not been implemented. By the time charges are filed, the government has typically been investigating for months or years.
What should I do if I receive a target letter or subpoena in a procurement fraud investigation?
Retain experienced federal criminal defense counsel immediately. A target letter means DOJ has identified you as a person whose conduct is within the scope of a grand jury investigation. A subpoena for documents or testimony in a procurement fraud case often signals that a criminal investigation is underway. Do not respond to the subpoena, contact investigators, or make statements to agency officials before consulting counsel. Voluntary statements made before consulting a lawyer are generally admissible in a subsequent criminal prosecution. If parallel civil or administrative proceedings are active, every response must be evaluated for its impact across all proceedings. Early intervention by defense counsel who understands federal procurement law and DOJ’s investigative methods can shape the course of an investigation before charges are filed.
What are the defenses to federal procurement fraud charges?
The principal defenses attack the elements the government must prove beyond a reasonable doubt. The falsity defense challenges whether the alleged misrepresentation was actually false, particularly where contract terms are ambiguous, estimates were reasonable at the time, or compliance certifications reflected partial compliance under a standard that permits staged implementation. The materiality defense challenges whether the false statement was capable of influencing the government’s contracting or payment decision, as required by Neder v. United States. The intent defense attacks whether the defendant acted with knowledge and specific intent to defraud, through evidence of good-faith reliance on professional advice, reliance on internal compliance clearance, reasonable interpretation of ambiguous contract terms, or the absence of concealment. At sentencing, defense counsel challenges the government’s loss calculation under the U.S. Sentencing Guidelines.
Can false cybersecurity certifications lead to federal criminal charges?
Yes. Cybersecurity misrepresentation is an emerging basis for criminal prosecution in the procurement context. In December 2025, a government contractor’s senior manager was indicted in the District of Columbia under 18 U.S.C. section 1031 (major government fraud), wire fraud, and obstruction of a federal audit for concealing FedRAMP and DOD cybersecurity deficiencies in a cloud platform used by the U.S. Army and at least five other federal agencies. Individuals who sign or submit cybersecurity compliance certifications face personal criminal exposure if those certifications do not match the actual security posture of the system. The defense question in these cases is whether the certification was false or whether the system was in partial compliance with a framework that contemplates staged implementation through authorized Plans of Action and Milestones.
What types of procurement fraud is DOJ prosecuting in 2026?
Recent criminal cases demonstrate the range. These include bid rigging on military IT contracts (the April 2026 Air Force case, $37 million in inflated contracts over nine years), fraudulent invoicing on military supply programs (the Navy fuel fraud case resulting in a five-year prison sentence for fabricated invoices for fuel that did not exist), bribery of procurement officials (the January 2026 NATO construction bribery indictment, cash and personal benefits exchanged for falsified reviews and confidential bid information), and cybersecurity misrepresentation (the December 2025 indictment for concealing FedRAMP deficiencies affecting the U.S. Army and five other agencies). Each case was investigated by multi-agency teams coordinated through the Procurement Collusion Strike Force or DOJ’s Fraud Section.
Where does Armstrong & Bradylyons PLLC defend federal procurement fraud cases?
Armstrong & Bradylyons PLLC defends executives, program managers, subcontractors, and individuals in federal procurement fraud investigations and criminal prosecutions nationwide. Scott Armstrong has tried 16 federal jury trials in complex white-collar cases in federal courts across the country. He served for nearly a decade at DOJ’s Fraud Section as an Assistant Chief in the Market Integrity and Major Fraud Unit, the same unit now absorbed into the National Fraud Enforcement Division. Drew Bradylyons served as Chief of the Financial Crimes and Public Corruption Unit in the Eastern District of Virginia, where he led and supervised prosecutions of frauds on the government including procurement fraud and government contracting fraud. The firm is based in Washington, D.C. and defends clients in every federal district.
