New DOJ Fraud Chief Position Has Ex-Officials Questioning Motive

The White House plan to directly operate a new Justice Department fraud division generated widespread confusion over what veteran officials criticized as a duplicative, politicized approach to financial crime.

Vice President JD Vance announced plans Thursday for a Senate-confirmed DOJ assistant attorney general with “nationwide jurisdiction over the issue of fraud” to be “run out of the White House.” Neither Vance nor an accompanying White House fact sheet made reference to the department’s established criminal and civil fraud offices at DOJ headquarters that handle such matters.

“It seems like whoever had this idea doesn’t really know how DOJ works,” said Leslie Caldwell, the head of DOJ’s Criminal Division during the Obama administration.

The administration’s rollout, framed as an expansion of efforts to combat daycare center misconduct in Minneapolis, prompted multiple former DOJ officials from both parties to dismiss the effort as unserious.

The officials, some speaking anonymously out of fear of retaliation, labeled the new position as a political stunt unlikely to operate as a true litigating division supplanting investigative teams already focused on healthcare and government procurement schemes.

Other past DOJ leaders, however, weren’t as dismissive, citing Vance’s comments that a nomination will soon be made and that the Senate majority leader has already promised swift confirmation. They also raised concerns about the vice president’s declaration that the appointee will be supervised by himself and President Donald Trump as the DOJ targets the president’s perceived enemies.

“There can be no doubt that this individual reporting directly to the president or through the president is there for an ulterior reason,” said Stuart Gerson, who led the Justice Department’s Civil Division during the George H. W. Bush administration. “It’s a reprehensible thing in terms of the management of the Justice Department and the need for independent judgment on criminal matters.”

Congressional Approval

Establishing a new assistant attorney general and putting the person through the Senate confirmation process is a more durable step than previous administrations have taken to address nationwide crime trends. A more typical response is to stand up enforcement task forces, often run out of the deputy attorney general’s office, which coordinate and expedite the work of existing prosecutors.

It isn’t clear whether this latest DOJ restructuring necessitates an act of Congress.

The president is statutorily required to appoint 11 assistant attorneys general who “shall assist the Attorney General.” With the exception of the AAG for national security, the administration has discretion in how it uses the remaining 10 slots. The department recently disbanded one of those positions—the head of the Tax Division—which appears to permit the redesignation of that position to fraud.

White House supervision of the office, however, could implicate the law’s provision that the official must support the attorney general.

The White House fact sheet didn’t reference personal supervision of the fraud official by the president or vice president. Instead, it stated that the new assistant attorney general for fraud will advise DOJ’s top two officials on “issues involving significant, high-impact fraud investigations and prosecutions and related policy matters.”

DOJ representatives didn’t respond to a series of questions, including about statutory authority.

Potential Value

The fraud chief announcement comes in the immediate aftermath of Tysen Duva’s arrival as the Trump administration’s first Senate-confirmed Criminal Division leader who was already expected to face deep political challenges as a first-time manager. Now he’ll have the added tension of potentially competing with a separate, intersecting bureaucracy.

Several former career supervisors who’ve managed Criminal and Civil division fraud cases said they were skeptical about the program while also acknowledging potential benefits, if it were implemented with proper resources and ethical guardrails.

“For a position like this, the rub is always who’s going to do the work,” said Scott Armstrong, a principal at McGovern Weems who used to oversee DOJ financial fraud cases. “People are leaving DOJ at a fairly rapid clip, and agents—at least on the white collar squad—are being re-tasked elsewhere.”

Another source of uncertainty is language in the fact sheet indicating that the new division would merge civil and criminal fraud enforcers. Susan Strawn, who used to coordinate criminal and civil healthcare fraud for all US attorney’s offices, said that pulling those teams together could break down silos and improve the department’s ability to handle sensitive parallel proceedings.

“You have to ensure the appropriate restrictions are adhered to and that the ethical rules are not breached. If you don’t do that and there isn’t enough training on that, you put cases at risk,” added Strawn. “But overall, closer coordination can be a good thing, if done correctly.”

Still, the possible benefits could be outweighed by the risks of using fraud cases against the administration’s political adversaries, former officials said.

“Now they’re purporting to start a new focus on fraud, but what they’re actually doing is just creating a way to target certain people in certain states that are run by Democrats,” Caldwell said. “And that’s just not an appropriate way for prosecutorial resources to be used.”