DOJ Moves Fraud Attorneys to New Division, Reversing Plans (1)

The Trump Justice Department is attempting to surge anti-fraud cases by transferring white-collar prosecutors to a new division, backtracking on assurances to career attorneys that they’d remain insulated from the White House-driven effort.

The Criminal Division fraud section’s health care, tax, and market integrity units will shift, at least temporarily, under the control of newly appointed national fraud enforcement division head Colin McDonald, said people familiar with the plans. Their current boss, Trump-appointed Criminal Division leader Tysen Duva, was unsuccessful in trying to protect dozens of his trial attorneys specializing in public benefits and other financial crimes from moving to the new unit, added the individuals.

Former DOJ officials have panned the fraud division as a ploy to pursue politically motivated targets.

The new chain-of-command was formalized later Tuesday in a memo to DOJ employees describing it as an interim shift of 30 days. At that point a permanent transfer of those units would be assessed and the deputy attorney general would make the final decision.

McDonald “shall assume operational control” of those three fraud section units, effective immediately, the memo added.

Months before Acting Attorney General Todd Blanche and McDonald announced details Tuesday about coordinating taxpayer-funded fraud investigations, Duva issued a memo to his staff stating, “it has been decided that the fraud section will remain entirely intact under the current Criminal Division structure.”

Attorneys in Duva’s division expressed concern and feelings of betrayal at the reversal, which they see as potentially decimating the long-established fraud section to satisfy a new political agenda item, said the people, who spoke anonymously out of fear of retaliation. Some saw the move as especially baffling given that the three offices slated for transfer—health care, tax, and market, government, and consumer fraud units—contributed to what DOJ touted as a record-setting year in prosecutions and recoveries for public coffers.

DOJ spokespeople didn’t immediately provide a comment.

“Our vision is to build a robust fraud-fighting squad capable of investigating and prosecuting the full spectrum of fraud against taxpayer dollars. We are going to staff this division by some of the department’s best prosecutors—bringing together experts in health care fraud, tax fraud, benefits fraud, and corporate fraud under one roof and one mission, to protect the American people from fraud,” Blanche said Tuesday in his first press conference since taking the helm as temporary attorney general. “To the attorneys and staff who join this new division, you will have the entire department’s support as you work to protect the financial integrity of our entire government and the tax system that supports it.”

But without pulling in fraud section attorneys, the question of personnel resources for the fraud division had been a subject of confusion since Vice President JD Vance first announced its creation in January. Reneging on Duva’s prior commitment that his staff would stay put comes as the Trump administration has continued to emphasize the importance of scaling up fraud prosecutions, including in blue states such as Minnesota and California.

The memo further noted that all 93 US attorneys’ offices will designate a prosecutor to the initiative, and that other Criminal Division offices would lend litigating support. DOJ’s Civil Division, which handles significant public benefits fraud matters, will designate a “liaison” to the fraud division.

The civil fraud section, which investigates significant False Claims Act cases recovering billions in taxpayer fraud, won’t be shifting personnel for now, but the memo said that in 120 days the Office of Legal Policy will make a recommendation on “whether non-criminal elements of the Department should be brought within the National Fraud Enforcement Division.”

With McDonald standing by his side Tuesday, Blanche tried to downplay Vance’s previous comment that the fraud division would report directly to President Donald Trump and the vice president. Although he said the team would report to McDonald within DOJ, Blanche later acknowledged that the White House would be able to send the division referrals for criminal investigations.

The fraud section built a reputation over decades as the primary Main Justice office for cutting-edge corporate crime cases. Under the new realignment, it will be stripped of key enforcement units with more than 100 prosecutors.