DOJ's new fraud division faces internal strife, stalled investigations

White House has grown dissatisfied with McDonald’s case output

The Justice Department’s new National Fraud Enforcement Division, established earlier this year under President Trump and championed by Vice President JD Vance, is struggling to produce new cases amid an internal turf war, recruitment shortfalls, and White House dissatisfaction with its output. The division aims to address the $500 billion in federal funds lost to fraud annually, according to the Justice Department.

Colin McDonald, a 38-year-old former prosecutor in San Diego, was put in charge of the new division in April. To kick-start operations, more than 70 prosecutors who specialized in Medicare fraud and the illegal dissemination of opioids were transferred to his command, a move that ignited a monthslong feud with the older fraud unit where those lawyers had previously worked.

The rift has slowed some longstanding investigations because leaders of the older unit worried they would not receive recognition for enforcement actions in which they did the work, according to people familiar with the matter. After the older unit’s leader reclaimed some of the transferred prosecutors, he told some of his lawyers that he had “won” the fight, the people said. In what the Journal described as internal rebranding, the older unit was recently required to change its name so that only McDonald’s group could include the word “fraud” in its title.

White House officials have recently been dissatisfied with the volume of criminal cases McDonald has produced, believing he spent too much time building the new division and that he should be producing more cases and arrests, people familiar with their thinking said. A White House spokeswoman said McDonald “is delivering with unprecedented speed on the president’s promise to root out fraud and hold fraudsters accountable.” A spokesman for McDonald’s fraud division said it is “expanding fast, securing more resources and here to stay—relentlessly hunting every fraudster who steals from the American people.”

One investigation relegated to the slow lane involves a unit of the global consulting firm Accenture, according to some of the people familiar. Prosecutors have sought support for a criminal settlement that would require Accenture Federal Services to pay tens of millions of dollars in restitution to resolve a probe focused on a former employee who allegedly misled federal officials about cybersecurity controls for the company’s cloud-computing services. The former employee pleaded not guilty and is scheduled to face trial next year. A legal resolution with Accenture has not advanced because it remains unclear which fraud group would receive credit for the case, the people said. Accenture did not respond to requests for comment.

At a gathering of Southern prosecutors last month in Columbia, S.C., McDonald and other officials announced what they described as “record fraud enforcement actions.” But one of the cases highlighted was not new: the U.S. attorney for northern Mississippi pointed to a former federal employee convicted of plundering a pandemic-era loan program for distressed small businesses. The defendant was caught in 2022 and had already served his prison sentence, according to the Journal. A spokeswoman for the U.S. Attorney’s Office in Oxford, Miss., said the case was chosen because one remaining defendant will be sentenced in August and that “even where earlier enforcement actions existed, this administration drove the enforcement actions further.”

According to a review of court records, many of the early cases the fraud division touted in the spring were charged long before the unit opened, and some were filed before Trump took office in January 2025. The old Mississippi case featured more than 30 defendants accused of participating in a scheme to fraudulently obtain pandemic relief loans; every defendant had been convicted well before the press conference took place.

There is bipartisan agreement that fraud against the government is a problem and a worthwhile focus for the Justice Department. But some prosecutors internally have been wary of joining the new fraud division out of concern its mandate is partisan. Vance has called for an investigation into Democratic Minnesota Gov. Tim Walz and suggested that he and other Democrats are unwilling to address fraud in social-services programs.

“We’ve spent a ton of resources in Minneapolis combating fraud, and that includes a very intense look at the leadership and the programs and who’s administering them,” Attorney General Todd Blanche said this week.

In a memo made public Thursday, McDonald wrote that his division would soon have 500 lawyers and support staff. That includes dedicated fraud lawyers in nearly 100 U.S. attorney’s offices, a senior official said. The division expects to bring cases faster and surge resources at fraud hot spots as it connects prosecutors with better data analytics and other investigative support. McDonald is also working to forge tighter bonds with state law enforcers who help identify doctors and other medical providers who bilk Medicaid, the insurance program that covers over 70 million Americans and costs $900 billion annually.

Jeff Jackson, North Carolina’s Democratic attorney general, said he worries the antifraud campaign may take a partisan turn, but thinks federal prosecutors have played it straight so far. “I have seen rhetoric coming from the White House that I disagree with,” Jackson said. “But as to this specific effort, it has been bipartisan and has brought law enforcement together to fight fraud.”

U.S. attorneys around the country have been told to highlight the creation of McDonald’s division on news releases announcing new fraud cases, according to a memo sent to prosecutors in May. In late June, the division announced the results of a healthcare fraud surge: criminal charges or civil claims filed against 455 defendants and more than $6.5 billion in alleged fraud losses, including an $865,000 Bulgari necklace and a Ferrari 296 GTS valued at nearly $600,000 seized from defendants. McDonald has taken his campaign on the road in recent weeks, gathering prosecutors in Columbia, S.C., and later in Philadelphia, where he said prosecutors find fraud “everywhere we look.”