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U.S. Deputy Attorney General Todd Blanche issued a memo on May 19, 2025 launching the Civil Rights Fraud Initiative, which will use the False Claims Act, 31 U.S.C. § 3729 et seq. (FCA), to pursue claims against recipients of federal funds who violate federal civil rights laws.

The government has typically conducted FCA investigations and brought FCA claims against defense contractors and providers of federally funded health care services and equipment. The FCA makes it a civil violation to knowingly submit to the federal government a false or fraudulent claim for payment. The DOJ Memo announces that DOJ will now vigorously enforce the FCA against federal contractors and entities that receive federal grants who “knowingly violate[] civil rights laws … and falsely certif[y] compliance with such laws.” DOJ could bring a FCA claim, for example, against a company or institution for having misrepresented in a government grant or funding agreement that it complies with Title VI, a federal civil rights statute barring discrimination based on race, color, or national origin, or Title IX, which bars discrimination based on sex.

The FCA is a potent investigative tool. Those found to have violated the law to are liable for damages of three times the amount falsely claimed, and statutory penalties of between $14,308 and $28,619 per false claim (amounts that are mandated by statute to increase with inflation). Often, after the government conducts an FCA investigation, the target of the investigation feels pressured to negotiate a settlement before the government even files a complaint: the FCA’s treble damages provision gives targets great incentive to settle rather than fight, if the government offers to settlement for double damages rather than the statutorily permitted treble damages and to cut off mounting legal fees to defend a case.

The DOJ Memo also calls on private parties to bring qui tam actions under the FCA for such violations. The FCA authorizes such qui tam lawsuits by “private persons” (who are essentially whistleblowers) on behalf of the federal government. If the government declines to take over prosecution of the case but also declines to dismiss it, the whistleblower may maintain the lawsuit on the government’s behalf. If the lawsuit is successful, the whistleblower will receive 15-25% any final award or settlement amount. This provision gives whistleblowers a strong and effective incentive to bring claims and expands the risk of costly FCA litigation and potential liability for companies or institutions that receive federal grants or funding.

The Memo provides guidance on how DOJ will carry out the mission defined in President Trump’s January 21, 2024 Executive Order, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” That E.O. requires that every agency head include—in every contract or grant award—“(A) a term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code; and (B) A term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” Section 3(b)(iv). The alleged failure to fulfill certifications in grant applications is actionable under the FCA.

The Memo echoes the E.O. by explicitly implicating the FCA when federally funded entities “certify compliance with civil rights laws while knowingly engaging in racist preferences, mandates, policies, programs, and activities, including through diversity, equity, and inclusion (DEI) programs that assign benefits or burdens on race, ethnicity or national origin.” The Memo referenced the 2023 Supreme Court decision in Students for Fair Admissions, Inc. v. President & Fellows of Harvard College and Students for Fair Admissions, Inc. v. University of North Carolina to explain that “while racial discrimination has always been illegal, the prohibition on such policies became clear” after the Supreme Court overruled decades of precedent by holding that affirmative action programs, like Harvard’s, violated the Equal Protection Clause of the Fourteenth Amendment. The government may now argue that “DEI” programs that a federally funded entity engaged in after that decision could satisfy the “knowingly” element for fraudulent conduct under the FCA if the entity certified compliance with civil rights laws. The Memo also asserts that a university that accepts federal funds “could” violate the FCA when it encourages antisemitism, refuses to protect Jewish students, allows men to intrude into women’s bathrooms, or requires women to compete against men in athletic competitions.

The EO’s condition for grants and contracts and the Memo’s encouragement to whistleblowers to bring qui tam claims will almost certainly incentivize mission-oriented organizations, the FCA plaintiffs’ bar, and the government itself. In fact, the Memo comes only a week after the DOJ notified Harvard it was investigating FCA claims against it, according to the New York Times. The focus of the investigation is whether Harvard University “defrauded” the federal government in connection with Harvard’s admissions process.

In light of the DOJ Memo, any recipient of federal money should review their policies and procedures alignment with federal civil rights laws. They also should review the certifications made in contracts and grants for federal funding. Counsel experienced in the FCA can guide entities in navigating these new risks.

To discuss the risks associated with the new Civil Rights Fraud Initiative, contact Partners Jolie Apicella, Paul Tuchmann, Caroline Park, or Senior Counsel Aaron Bayer.