Deputy AG Blanche directed DOJ to weaponize False Claims Act against federal grantees maintaining DEI and trans-inclusive policies

On May 19, 2025, Deputy Attorney General Todd Blanche issued a memorandum establishing the DOJ Civil Rights Fraud Initiative, co-led by the Civil Division's Fraud Section and the Civil Rights Division. The memo directed attorneys across both divisions to "aggressively pursue" False Claims Act cases against any recipient of federal funds — universities, hospitals, state governments, and federal contractors — that "knowingly violates federal civil rights laws" while "falsely certifying compliance." It specifically named maintaining DEI programs, permitting transgender women to use women's restrooms, and allowing transgender athletes to compete in women's sports as examples of civil rights violations triggering FCA liability, and strongly encouraged private whistleblowers to file qui tam lawsuits sharing in any monetary recoveries.

The False Claims Act is a Civil War-era statute designed to recover taxpayer money lost to government procurement fraud — false billing, phantom services, inflated contracts. DOJ's initiative repurposes it as a financial weapon against ideological noncompliance: institutions maintaining diversity programs or transgender-inclusive policies that receive federal grants could face treble damages, potentially worth hundreds of millions of dollars. The initiative is structurally distinct from threats of direct grant termination; it creates a permanent private enforcement mechanism in which any employee or competitor can trigger federal fraud liability against a grantee institution.

By April 2026, the initiative had produced its first resolution: IBM paid $17 million under an FCA claim alleging DEI-related hiring discrimination, establishing the theory's practical enforceability. The initiative's LGBTQ+-targeting provisions — framing transgender-inclusive bathroom and athletics policies as actionable "fraud" — explicitly subject transgender people's inclusion in public institutions to federal financial coercion, using the machinery of fraud law to accomplish what direct regulation of private conduct would not permit.