What You Should Know
On May 19, 2025, the U.S. Department of Justice (DOJ) announced the establishment of the Civil Rights Fraud Initiative. This initiative is a partnership between the DOJ’s Civil Fraud and the Civil Rights divisions.
The DOJ plans to utilize the federal False Claims Act (FCA) to investigate and, as it deems appropriate, pursue claims against any recipient of federal funds that knowingly violates federal law. Additionally, the initiative allocates significant resources towards the investigation of FCA-related claims. These resources include the U.S. Department of Education, Department of Health and Human Services, Department of Housing and Urban Development, and Department of Labor. The initiative will also establish partnerships with state attorneys general and local law enforcement to share information and coordinate enforcement actions.
In the memo released to the public about the initiative, the DOJ states that there could be a violation of the FCA when a university “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 DOJ also focuses on diversity, equity and inclusion (DEI) programs enacted by federal-funding recipients or federal government contractors who certify compliance with civil rights laws while knowingly engaging in “racist preferences, mandates, policies, programs and activities, including through DEI programs that assign benefits or burdens on race, ethnicity or national origin.”
Importantly, the memo states that the DOJ “recognizes that it alone cannot identify every instance of civil rights fraud. Congress likewise has recognized as much and, as a result, has authorized private parties to protect the public interest by filing lawsuits and litigating claims under the [FCA] – and, if successful, sharing in any monetary recovery.” The memo further states that the DOJ, “strongly encourages these lawsuits” and “encourages anyone with knowledge of discrimination by federal-funding recipients to report that information to the appropriate federal authorities so that the Department may consider the information and take any appropriate action.”
What This Might Mean
Although there are still many legal challenges pending as to the administration’s Executive Orders regarding “illegal” DEI, the establishment of this Civil Rights Fraud initiative indicates an increased risk of investigation and potential liability for all organizations receiving federal funding due to the administration’s significant resource allocation and encouragement of private parties to file lawsuits.
Schools and institutions that complied with the Department of Education’s Certification Requirement discussed in our April Legal Update – “Department of Education Certification Requirement Enforcement Date Extended to April 24,” may be at the front of the line for enforcement, due to their recent certification of the mentioned provisions.
As noted in our March Legal Update – “Whistleblowers Get a Stronger Whistle: The False Claims Act Liability Under President Trump’s DEI Order” – there is significant exposure to potential claims of civil liability under the False Claims Act.
Next Steps
As we await the outcome of current legal challenges surrounding DEI programming, schools, institutions and business recipients of federal funds should actively monitor their activities and be aware of potential FCA liabilities, and work with legal counsel to best position themselves for potential investigations and lawsuits.
Those who have not yet reviewed their DEI initiatives, policies, programs or practices should prioritize this work. Audits should be conducted with the assistance of legal counsel so that communications regarding what is currently in place and any proposed changes are set up to be protected by the attorney-client communication privilege and legal work product doctrine. Recipients of federal funds should be careful when auditing their current initiatives policies, programs and practices to avoid creating documentation that may constitute harmful evidence in the event of an investigation or litigation.
If you have questions about the potential impacts of this initiative on your school, institution or business, please contact Tammy Somogye or your regular Lathrop GPM attorney.