Justice Department to Use False Claims Act to Target DEI Policies (1)

The Trump administration wants to use the False Claims Act, a law meant to target fraud by government contractors and federal-funding recipients, as a tool to target universities and other private institutions over their diversity, equity, and inclusion policies.

The Justice Department said Monday that the new initiative would utilize the law to go after any institution “knowingly” violating federal civil rights laws despite certifying its compliance with such statutes.

The department cited DEI programs from federal contractors and alleged antisemitism on university campuses as potential areas where the False Claims Act could be implicated.

The effort is part of a broader overhaul of the Justice Department’s civil rights enforcement priorities and as President Donald Trump wages a broad-scale attack on DEI programs in the public and private sectors.

“Institutions that take federal money only to allow anti-Semitism and promote divisive DEI policies are putting their access to federal funds at risk,” Attorney General Pamela Bondi said in a statement. “This Department of Justice will not tolerate these violations of civil rights – inaction is not an option.”

The Justice Department announced the new enforcement initiative two days before Bondi is set to give the White House a list of public companies, universities, and other entities that the Trump administration should consider investigating for what it says is “Illegal DEI.” Trump in January ordered the DOJ to give the White House the list and identify other ways to use civil rights laws to fight DEI by Wednesday.

Trump also in January issued an order requiring any recipient of government funds to certify they do not operate programs “promoting DEI,” which could offer a path for the DOJ to scrutinize federal contractors’ representations under the False Claims Act.

A federal trial court in February partially blocked the order, but the US Court of Appeals for the Fourth Circuit a month later granted the Trump administration’s request to pause the injunction while its appeal is considered. Judges on the court, however, voiced concern about the administration’s attack on DEI without clear definitions on what types of conduct or policies it seeks to ban.

The False Claims Act allows the government to recover penalties from organizations that may have deceived it when applying for federal contracts or grants. The DOJ can seek treble damages, making it a powerful tool in the government’s arsenal. The DOJ said in January it logged nearly $3 billion in settlements and judgments under the False Claims Act during fiscal year 2024.

“Using the FCA for social engineering, effectively, would be new,” said Martin Weinstein, the head of Cadwalader Wickersham & Taft’s compliance, investigations, and enforcement practice.

“It’s going to be interesting to see how they make FCA cases in connection with conduct that may not be directly tied to a financial aspect of a government contract,” he added.

‘Civil Rights Fraud Initiative’

Deputy Attorney General Todd Blanche said in a memo circulated Monday that its “civil rights fraud initiative” would be co-led by the department’s civil fraud section and civil rights division, which would each enlist a team of attorneys “to aggressively pursue this work together.” He added that all 93 US Attorney’s Offices would identify one assistant US attorney to work on such matters.

The DOJ’s civil rights division, established in 1957 during the civil rights movement, has historically enforced anti-discrimination laws in voting, education, housing, and other areas. Since Trump took office, more than two-thirds of the division’s attorneys have left or been reassigned, as new leadership at the division focuses its resources toward anti-Christian bias, gun rights and other conservative priorities.

The division, now led by Trump’s former personal attorney Harmeet Dhillon, announced an investigation Monday into the city of Chicago’s hiring practices, after its mayor highlighted in public remarks the number of Black officials in his administration.

She outlined her priorities for the division at a speech earlier this month as fighting against racial quotas, blocking transgender women from participating in women’s sports teams, and protecting Jewish students on college campuses, among other missions.

Blanche’s memo claimed that the FCA is implicated when recipients of federal dollars certify compliance with civil rights laws while engaging in “racist preferences, mandates, policies, programs, and activities, including through diversity, equity, and inclusion programs.”

He also claimed that universities receiving federal grants may 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 interest in using the law to target universities comes as the Trump administration escalates its fight with institutions such as Harvard University, freezing billions of dollars in grants used for research projects and other programs. The administration says the money is being revoked over its handling of discrimination on campus.

Harvard is suing to prevent the cuts, claiming the administration is halting the funds over its refusal to give up control of its academic programs.