Trump administration using fraud law to target major companies on DEI
- - Trump administration using fraud law to target major companies on DEI
Jessica Guynn, USA TODAY December 29, 2025 at 8:30 PM
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The Trump administration is investigating diversity initiatives at major companies under the False Claims Act, a federal law the Department of Justice uses to take action against contractors that defraud the government.
As USA TODAY reported in October, the DOJ earlier this year began issuing civil investigative demands to employers across a broad range of industries, directing them to turn over information about their diversity, equity and inclusion programs.
The use of CIDs – a legal tool that allows the government to gather information during a civil investigation and that is usually reserved to pursue government contractors that submit fraudulent bills for their services – has rattled corporate America because it leaves companies vulnerable to claims that could reach into the millions of dollars.
Among the companies that have received DOJ investigative demands are Alphabet’s Google and Verizon Communications, the Wall Street Journal reported. Google could not be immediately reached for comment. Verizon declined to comment.
University of Louisville students holding a rally to protect diversity, equity, and inclusion (DEI) on their campus in March 2024.DOJ intensifies DEI scrutiny
Just hours after he took the oath of office, President Donald Trump issued executive orders to dismantle diversity programs and directed federal contractors to end "illegal DEI discrimination." Fearing lawsuits and the loss of government contracts, dozens of the nation’s largest companies, from McDonald’s to Facebook owner Meta, rolled back or eliminated DEI programs.
In May, the DOJ signaled its intention to investigate federal contractors and grant recipients by creating the "Civil Rights Fraud Initiative," which threatens legal action under the False Claims Act, a civil law that allows the government to recover funds lost to fraud.
Government scrutiny has only intensified as the Trump administration moves aggressively to pressure employers into overhauling hiring practices to align with the president’s political agenda.
While testifying before the Senate Judiciary Committee in July, Harmeet Dhillon, the assistant attorney general for civil rights, issued a warning about the Trump administration’s crackdown on DEI initiatives. During her testimony, Dhillon promised the Trump administration would bring "numerous investigations and lawsuits against institutions that continue to offend our federal civil rights laws."
"Either DEI will end on its own," Dhillon told senators, "or we will kill it."
DEI divided: Two men fought for jobs in a river-town mill. 50 years later, the nation is still torn.
False Claims Act lawsuits can be costly
Damages and penalties can quickly add up in False Claims Act lawsuits, lawyers told USA TODAY. Defendants are at risk of being held liable for three times the damages the government alleges.
What’s more, the DOJ is encouraging whistleblowers to file DEI lawsuits on the government’s behalf and potentially receive a portion of the windfall. Last year, the DOJ took in nearly $3 billion in False Claims Act settlements and judgments.
Just the mere threat of a False Claims Act investigation is a powerful cudgel, lawyers say. And becoming a target of the Trump administration carries significant business risks, from reputational damage to shareholder class action lawsuits.
"I’ve had many leaders say to me, 'we are very confident from a purely legal perspective in what we are doing,'" David Glasgow, executive director of the Meltzer Center for Diversity, Inclusion and Belonging at the NYU School of Law, told USA TODAY in October. "And then a lot of them will say to me, 'none of that really matters if we have been dragged through the mud by this administration.'"
This article originally appeared on USA TODAY: DEI fraud? Trump administration launches investigations
Source: “AOL Money”
