The US Department of Justice is directing federal prosecutors to use their “entire toolbox” in a crackdown on fraud against the government, as it combats schemes that cost taxpayers hundreds of billions of dollars each year.
Colin McDonald, head of the National Fraud Enforcement Division, is issuing a directive calling on prosecutors to use a range of criminal and civil powers to target fraud networks, claw back stolen funds and seek stiffer sentences, according to a memo shared with the FT.
“This is a full-service fraud shop that will utilise whatever the sharpest tool in our toolbox is in confronting any particular fact pattern,” McDonald said in an interview.
The Trump administration has made fraud involving government-funded programmes a top enforcement priority, which McDonald said has been “gripping” the nation for two decades.
The US Government Accountability Office estimates that some $3tn in improper payments have been released since 2003, including $186bn in 2025 alone.
Last year, more than half of improper payments stemmed from the federal health insurance programmes Medicare and Medicaid, the office said in July. Other major programmes targeted by scams include tax and food benefits for low-income Americans and other assistance grants.
McDonald’s push for the fraud enforcement division to take a more comprehensive approach has left some former DoJ officials questioning how much the new division’s mandate will really change enforcement.
“You can’t prosecute by memo,” said Paul Pelletier, a former principal deputy chief of the criminal division’s fraud section, who questioned whether, without new training to back up the rallying cry, the directive amounted to “how to prosecute fraud 101”.
The division was established by US attorney-general Todd Blanche six months ago to target fraud against the government and theft of taxpayer dollars. In August, its headcount ballooned to 500 attorneys and staff, primarily pulled from other DoJ divisions.
That includes a new team of asset forfeiture and recovery experts who will work with prosecutors to seize alleged criminal proceeds sooner. The memo directs the asset recovery section to pursue “pre- and post-indictment enforcement actions”, including restraining orders, warrants and civil actions for early disruption of fraud schemes.
The fraud division will also pursue tax and securities fraud charges where taxpayer funds are at stake. DoJ dissolved its tax division last year.
In building out the new fraud division, prosecutors have been pulled from the criminal division section that has prosecuted white-collar crimes for decades, prompting internal strife. Sandra Moser, former chief of the criminal division’s fraud unit, said the personnel shifts seemed to occur despite expectations that the older unit would maintain its mandate to pursue frauds targeting people and businesses.
“This memo sort of takes one step further in potentially blurring those lines,” she said.
McDonald said the division had been building “very deliberately, brick by brick, a fortress for the people of the United States that will be focused on combating this fraud problem”.
Multiple divisions across DoJ, plus all 94 US attorneys’ offices, were focused on the “full range of fraud”, he said, and the memo highlighted an area of securities fraud the division would prioritise to crack down on companies both defrauding the US and committing securities fraud violations.
“The attorney-general has given the fraud division vast authority to find fraud and then fight it with the entire toolbox of fraud tools that Congress has made available,” he said.