On May 19, 2025, the Department of Justice (“DOJ”) announced its Civil Rights Fraud Initiative (the “CRFI”). As discussed in our post related to that announcement, the CRFI mobilizes federal, state, and local law enforcement to investigate whether recipients of federal funds have DEI programs that violate federal civil rights laws. Multiple federal and state agencies are reportedly conducting investigations into DEI programs within corporations and institutions of higher education.
DOJ’s announcement in May explained that CRFI investigators will “utilize the False Claims Act to investigate and, as appropriate, pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws.” To do so, in addition to DOJ’s civil fraud teams, the CRFI draws on law enforcement resources at all levels of government: other federal agencies, state attorneys general, and local law enforcement. Every U.S. Attorney’s Office across the country has been instructed to assign at least one prosecutor to advance CRFI efforts.
Citing the Supreme Court’s 2023 decision in Students for Fair Admissions and President Trump’s January 21, 2025 Executive Order 14173 on DEI, the CRFI memo asserts that the False Claims Act may apply if federal funding recipients falsely certify compliance with civil rights laws while knowingly engaging in race-based DEI practices.
Federal contractors and grant recipients should be on alert. The False Claims Act (FCA) gives the DOJ authority to launch investigations. Importantly, the FCA also gives private citizens (e.g., company employees, vendors, and subcontractors) the right to bring lawsuits on behalf of the federal government and rewards whistleblowers with a sizeable share of any recoveries. With its CRFI announcement, the DOJ significantly widened its investigative scope by actively encouraging private citizen whistleblowers (qui tam relators under the FCA) to submit potential civil rights fraud cases for review.
Media reports indicate that several DEI-related investigations are underway. A recent Wall Street Journal article indicates that DOJ has delivered investigative demands to Google and Verizon related to their workplace DEI programs. The article cites the same unnamed sources for the proposition that DOJ’s scrutiny also has fallen upon “industries ranging from automotive and pharmaceuticals to defense and utilities.”
While the nature or strengths of any of these potential investigations are unknown, and it is not clear whether any of the investigations were initiated by law enforcement independently or after a qui tam whistleblower’s tip, the timing of these investigation reports follows predictably from the May 2025 CRFI announcement. After DOJ’s explicit invitation to whistleblowers, any subsequent investigations would take months to gain traction. This is because, in addition to the time needed to formulate any complaints or investigative theories, the FCA contains specific procedural requirements and deadlines for qui tam relator cases. Notably, the FCA requires DOJ attorneys to review each qui tam relator’s complaint on a confidential basis and sets deadlines by which that review must be completed.
The FCA requires DOJ to decide whether DOJ will:
(i) take over the investigation and litigation;
(ii) allow the qui tam relator to continue the litigation on their own (but with DOJ still collecting the bulk of any settlement or judgment amounts); or
(iii) in unusual situations, dismiss the case outright. See 31 U.S.C. § 3730. The recent news of possible FCA investigations involving DEI programs suggests that, in the weeks and months following the May 2025 CRFI announcement, DOJ and/or CRFI investigators received whistleblower complaints and/or began investigations and pre-litigation assessments of potential FCA matters related to DEI programs.
DOJ’s pre-litigation investigative steps can be onerous and should be taken seriously. Under the FCA, investigators may issue civil investigative demands (“CIDs”), which require companies to produce documents, provide written responses to questions, or make witnesses available for depositions. All of this occurs before any formal FCA litigation begins. Pre-litigation CIDs often function as a case within a case, imposing heavy burdens and serious legal risks on the companies or individuals who receive them. However, the pre-litigation CIDs also provide opportunities to persuade government investigators not to proceed with formal FCA litigation, potentially averting even larger litigation expenses while significantly reducing risk exposure. Even if DOJ does not dismiss a case but, instead, allows a qui tam relator’s case to proceed on its own, this can be a major victory: DOJ’s own statistics show that settlement and judgment amounts in cases where DOJ declines to intervene are typically much smaller than those where DOJ is driving the case. (DOJ annual report here.)
Although the DOJ’s civil rights fraud theories under the FCA are still developing and it is unclear whether they will lead to successful judgments or settlements, the CRFI is now active. Additionally, just receiving a CID can result in significant legal expenses and increases the likelihood of facing major litigation and related reputational harm.
In addition to federal investigations, most states and some municipalities have their own versions of the False Claims Act, meaning that government contractors and other recipients of government funds should scrutinize workplace DEI programs and any certifications related to compliance with civil rights laws. Examples of recent state-level action: (i) in September 2025, The Tennessean reported that the Tennessee Attorney General’s Office was investigating Deloitte, one of the state’s largest vendors that manages its Medicaid eligibility system, over “potential ‘unlawful discrimination’ tied to its hiring practices and former diversity, equity and inclusion (DEI) programs”; (ii) in August 2025, the Indiana Citizen reported that the Indiana Attorney General’s Office issued CIDs to the University of Notre Dame and Butler University seeking information about each school’s DEI programs. These investigations indicate that investigators are probing allegations that relate to DEI programs that were in place before and after the beginning of the second Trump administration.
Contractors and fund recipients should also watch internal employee whistleblower complaints that may signal potential exposure under the FCA as well as collateral employment retaliation litigation involving the purported whistleblower. These might include allegations about the unfairness of a workplace program or questions about compliance certifications made by the employer about DEI-related programs. Whether concerned with federal or state action under the FCA, organizations should conduct comprehensive reviews of employment-related programs and policies to identify areas of risk. This review—if not already finished—should cover both public-facing information and an assessment of how existing or new DEI policies have been put into practice, taking into account the likely rise in qui tam relator and whistleblower actions as well as increased scrutiny from government agencies related to the CRFI.