Fraud is Now a National Enforcement Priority: What Federal Grantees Must Do Next

January 9, 2026

Recent developments from the White House remove any lingering doubt: fraud, waste, and abuse (FWA) enforcement has entered a new phase.

The Trump Administration has announced the creation of a new Department of Justice Division for National Fraud Enforcement, led by a Senate-confirmed Assistant Attorney General with nationwide jurisdiction over fraud involving federal programs, federally funded benefits, businesses, nonprofits, and private citizens.

This development builds on—and significantly accelerates—existing oversight by PRAC, agency Offices of Inspector General (OIGs), and U.S. Attorneys’ Offices. For grantees, this is not rhetoric. It is a structural change in how fraud enforcement will be organized, resourced, and pursued.

What the New DOJ Division Signals

According to the White House fact sheet, the new DOJ division will:

• Lead multi-district and multi-agency fraud investigations
• Set national fraud enforcement priorities
• Coordinate directly with U.S. Attorneys, federal agencies, and law enforcement
• Pursue both criminal and civil fraud, including False Claims Act actions
• Identify and close systemic vulnerabilities in federal programs

In short: enforcement will be centralized, data-driven, and proactive, not reactive.

Minnesota Is the Test Case — Not the Exception

The Administration has made clear that Minnesota is the initial focus, but not the endpoint. The scope of activity already underway is extraordinary:

• 98 defendants charged, 64 convicted
• 1,750+ subpoenas, 130+ search warrants, 1,000+ witness interviews
• DOJ doubling prosecutors assigned to Minnesota fraud cases
• FBI deploying forensic accountants and analytics teams
• DHS conducting door-to-door investigations and immigration-related reviews
• CMS pausing Medicaid payments to flagged programs
• HHS freezing childcare payments nationwide pending documentation
• SBA halting grant payments and suspending thousands of borrowers
• HUD, DOL, USDA launching targeted program reviews

These actions span healthcare, housing, childcare, nutrition assistance, unemployment insurance, and business programs—illustrating that no funding stream is insulated.

The Key Shift for Grantees: From “Audit Risk” to “Enforcement Risk”

Historically, many grantees treated FWA as:

• An audit issue
• A reporting requirement
• A downstream compliance exercise

That posture is now outdated.

The federal government is signaling that failure to prevent, detect, and act on fraud may itself be viewed as a violation—particularly where red flags were visible and ignored.

Just as importantly, perception matters. Even when fraud represents a small fraction of total spending, weak oversight can trigger:

• Payment freezes
• Grant suspensions
• Expanded audits
• Legislative and media scrutiny
• Reputational damage that outlasts the funding

What Grantees Should Be Doing Now

1. Reevaluate Internal Controls as If You’re Defending Them

Ask a hard question: If a prosecutor reviewed our controls—not just an auditor—would they see reasonable prevention and detection efforts?

Focus areas:

• Segregation of duties
• Eligibility verification
• Invoice review and approvals
• Documentation of deviations and judgment calls

2. Strengthen Subrecipient and Contractor Oversight Immediately

Many major fraud cases originate downstream. Grantees should:

• Refresh subrecipient risk assessments
• Tie monitoring intensity to risk
• Verify documentation, not just receipt of reports or self-attestations
• Act on anomalies early—and document that action

3. Treat Documentation as a Control

In enforcement actions, undocumented decisions are often treated as nonexistent decisions. Maintain contemporaneous records explaining:

• Why costs were allowable
• Why procurement paths were selected
• Why exceptions were granted
• Why monitoring conclusions were reached

4. Train Staff to Escalate, Not Ignore

Front-line staff often see problems first. Train teams to recognize and escalate:

• Duplicate or inconsistent documentation
• Unusual billing or volume spikes
• Pressure to bypass review for speed
• Repeat issues tied to the same entity

And make escalation safe, expected, and documented.

5. Assume Data Analytics Are Already Being Used

PRAC, OIGs, and DOJ increasingly rely on:

• Cross-program data matching
• Pattern detection
• Network analysis

If your data doesn’t reconcile cleanly—or your explanations aren’t documented—someone else will notice.

The Bottom Line

The creation of a National Fraud Enforcement Division makes one thing clear: fraud prevention is now a front-end expectation, not a back-end cleanup exercise.

No system will ever reduce fraud to zero. But organizations that can demonstrate:

• Good-faith oversight
• Strong internal controls
• Risk-based monitoring
• Prompt corrective action

are far better positioned to withstand scrutiny—financially, legally, and reputationally.

This moment is less about fear and more about governance maturity. The organizations that adapt now will protect funding, preserve flexibility, and maintain public trust in an environment where enforcement is only intensifying.

Managing grants efficiently, without compromising compliance and integrity, can be a challenging task. If your organization is navigating the complexities of grant management, we can help you enhance oversight, streamline processes, ensure outcomes and reduce the risks of waste, fraud, and abuse. Reach out today to learn how our expertise in grants management can ensure your programs meet their goals, stay compliant, and make the best use of taxpayer dollars. 

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