DOJ's Legal Strategy for Turning DEI Programs Into Fraud

May 22, 2025

Issue Brief: DOJ’s Civil Rights Fraud Initiative & the False Claims Act

Todd Blanche, US deputy attorney general, speaks to members of the media outside federal court in Washington, DC, US, on Monday, April 21, 2025. Photographer: Kent Nishimura/Bloomberg via Getty Images

On May 19, 2025, Deputy Attorney General Todd Blanche announced the “Civil Rights Fraud Initiative.” In the memo, Blanche directs DOJ lawyers to use the False Claims Act (FCA)—a federal law designed to fight fraud against the government—to go after federally funded colleges, universities, and other institutions that the government determines have “knowingly violated civil rights laws.” Potential violations include DEI programs DOJ views as improperly race-based.

You may be wondering, how might an alleged civil rights violation amount to fraud? If it sounds like a novel legal theory, it’s because it is. As is often the case now, the law is being innovated to aggressively further the government’s policy goal, in this case, wiping out race- and gender-conscious policies at universities.

In law school, we learn the law by briefing cases and issues. What follows is an issue brief outlining some of the basics you need to understand this new development.

What is the False Claims Act (FCA)?

The FCA is a federal law enacted in 1863 during the Civil War to fight fraud by contractors supplying the Union Army.

It imposes liability on individuals or entities that knowingly submit false or fraudulent claims for payment to the U.S. government.
It allows for “treble” damages” (three times the government’s loss) and per-claim fines.
It includes a “qui tam” provision, enabling private individuals (whistleblowers) to sue on behalf of the government and potentially get a share of recovered damages.

How has the FCA traditionally been used?

FCA has been widely used to combat fraud in healthcare—such as providers submitting false claims to Medicare and Medicaid—and in defense contracting, targeting suppliers who deliver substandard goods or services to the military.

Higher education examples: Universities have faced FCA actions mostly in relation to fraudulent research grant submissions, inaccurate reporting of research outcomes, or improper billing tied to federal research funding. Schools have also faced FCA lawsuits over fraudulent practices in obtaining or distributing federal student financial aid, such as misrepresenting enrollment data.

Duke University (2019): Paid $112.5 million to settle allegations that it knowingly submitted falsified research data in grant applications.
University of Phoenix (2009): Paid $67.5 million to settle allegations that it used incentive-based pay for admissions counselors tied to student recruitment, which is prohibited.

Legal and policy backdrop for the initiative:

DOJ’s Civil Rights Fraud initiative builds on:

Students for Fair Admissions v. Harvard (2023): Supreme Court decision which limited race-conscious admissions, stating that “eliminating racial discrimination means eliminating all of it.”
Executive Order 14173 (Jan 21, 2025): “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” directing agencies to “combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.”
Attorney General Bondi’s Memo (Feb 5, 2025): Directing DOJ to explore tools, including the FCA, to challenge DEI policies.

How does DOJ intend to use the FCA against colleges?

The DOJ’s memo outlines some specific scenarios where institutions could face FCA liability, including:

Allowing antisemitic harassment to persist on campus.
Permitting transgender individuals to access facilities or participate in sports aligning with their gender identity.
Implementing DEI programs that assign benefits or burdens based on race, ethnicity, or national origin.

Enforcement strategy:

The initiative will be co-led by the DOJ Civil Division’s Fraud Section and the Civil Rights Division.
Each of the 93 U.S. Attorney’s Offices will designate a lawyer to support the initiative.
DOJ encourages whistleblowers to file qui tam lawsuits under the FCA.

DOJ is relying on the implied certification theory, which treats the submission of a federal funding claim as an implicit promise to comply with all relevant laws. DOJ links alleged civil rights violations with FCA liability as follows:

Certification of compliance: Colleges and universities applying for federal funds sign contracts and certifications—such as grant applications—that formally commit them to obey civil rights statutes such as Title VI (prohibiting race-based discrimination) and Title IX (prohibiting sex-based discrimination), making compliance a condition of receiving federal money.
Noncompliance: If an institution enacts policies or programs—such as DEI initiatives—that DOJ deems discriminatory, it may be considered noncompliant with these civil rights laws.
False claim submission: By submitting claims for federal funds, a noncomplying institution may be deemed to have falsely certified compliance, rendering their claims “false” even if no explicit lies appear on the documents.
Materiality: For liability to attach, the false certification must be material—meaning it must be important enough that the government would have refused to pay had it known about the violation. DOJ points to Executive Order 14173 and Department of Education guidance, which state that federal funding may be withheld for unlawful race-based programs, as evidence of materiality.
Knowledge: The institution must have knowingly submitted the false claim. DOJ argues that the Supreme Court’s language in Students for Fair Admissions—“eliminating racial discrimination means eliminating all of it”—put universities on clear notice that race-conscious practices are unlawful, satisfying the knowledge requirement.
Legal foundation: The Supreme Court’s decision in Universal Health Services v. Escobar (2016) confirmed that under the FCA, submitting a claim that implicitly certifies compliance with material legal requirements, while knowingly failing to comply, can constitute fraud. DOJ’s theory applies this precedent to civil rights compliance certifications.

What questions remain unanswered?

Legal validity of the DOJ’s theory: Courts have yet to determine whether civil rights violations constitute FCA violations under the implied certification theory.
Determining “knowing” violations: Whether institutions can be deemed to have knowingly violated civil rights laws, especially in areas of legal ambiguity left by the Supreme Court’s recent affirmative action decision.
Retroactive application: Whether the DOJ will pursue past certifications or focus solely on future conduct.

Why this matters:

Using the FCA to police institutional compliance with civil rights laws is a significant shift in federal enforcement. This approach introduces substantial financial risks for colleges and universities, potentially reshaping how they implement DEI programs and certify compliance.