WASHINGTON, DC – October 2, 2026 (STL.News) The U.S. Department of Justice is intensifying a nationwide campaign against fraud, unveiling new corporate enforcement priorities as federal prosecutors announce convictions, guilty pleas and criminal charges involving government programs, health care, banks and other financial schemes across the country.
The Justice Department’s National Fraud Enforcement Division, a unit created earlier this year and headed by Assistant Attorney General Colin M. McDonald, is spearheading the expanded effort.
McDonald issued a new enforcement directive Oct. 1 instructing Fraud Division prosecutors to take what the department calls an “aggressive, all-tools approach” toward four major priorities: health care fraud, government fraud, tax fraud and trade fraud.
The policy comes as the federal government confronts potentially enormous losses from fraud.
The U.S. Government Accountability Office has estimated that the federal government lost between $233 billion and $521 billion annually to fraud during fiscal years 2018 through 2022.
The estimate is a statistical range rather than an accounting of confirmed criminal cases, and GAO has cautioned against treating it as a precise measure of current fraud. But even the low end illustrates the scale of the problem confronting federal agencies.
DOJ cited that estimate directly when announcing McDonald’s new corporate enforcement priorities.
“The Fraud Division has a clear mission: to prosecute fraud in the United States, no matter its size or complexity,” the Justice Department said in announcing the directive.
The new policy was followed Friday by a broad series of fraud-related enforcement announcements around the country.
Those cases are independent investigations and should not be interpreted as one coordinated criminal operation. Collectively, however, they provide a snapshot of the types of fraud federal authorities are targeting.
DOJ creates dedicated fraud division
The Justice Department announced the creation of the National Fraud Enforcement Division on April 7, making fraud enforcement a distinct component within DOJ.
Its stated mission is broader than simply recovering stolen taxpayer money.
DOJ describes the division as focused on investigating and prosecuting those who commit fraud against Americans, with significant attention directed toward schemes involving government programs, health care, taxation and trade.
The division also includes specialized prosecutors who work on health care fraud and other complex financial crimes.
McDonald’s Oct. 1 directive provides one of the clearest indications yet of how the new organization intends to approach corporate wrongdoing.
The memorandum, Directive 26-12, instructs Fraud Division prosecutors to pursue criminal activity involving its priority areas while considering corporate compliance programs, cooperation with investigators, voluntary disclosure of misconduct, and the conduct of individual executives and employees.
The policy also emphasizes recovering proceeds generated by fraudulent schemes.
For companies, the directive creates both risk and incentive.
Businesses implicated in serious misconduct can face federal prosecution, while companies that identify wrongdoing, disclose it, and cooperate with investigators may receive consideration under DOJ’s corporate enforcement policies.
The approach signals that federal fraud enforcement will not be limited to prosecuting individuals after money has disappeared.
DOJ also intends to scrutinize companies, their internal controls and their responses when misconduct is discovered.
Jury convicts pair in $13 million fraud scheme
One of the most significant cases announced Oct. 2 involved a nationwide scheme targeting federal programs created to assist elderly, disabled and homeless Americans.
A federal jury convicted Jael Watts, 45, of Alloway, New Jersey, and Luis Pino-Copete, 42, of Bogotá, Colombia, following a multi-week trial in Utica, New York.
The defendants operated Pearl Transit Corporation, a New Jersey company that purported to employ drivers nationwide to transport elderly and disabled people and conduct street outreach for homeless people.
Trial evidence established that Pearl Transit did not employ the drivers or perform the services represented in the fraudulent claims at issue, according to DOJ.
Instead, prosecutors proved that Watts and Pino-Copete submitted false employment and customer information using stolen identities.
Some people identified as Pearl Transit passengers were already dead when the company claimed to have transported them.
Some purported drivers lacked driver’s licenses and had never driven a vehicle. One had only a learner’s permit during the period when Pearl Transit claimed that person was providing transportation services.
The scheme targeted federal money distributed through state and local administrators, including the Federal Transit Administration’s Section 5310 Enhanced Mobility of Seniors and Individuals with Disabilities program and Department of Housing and Urban Development Community Development Block Grant and Emergency Solutions Grant programs.
Some of the funding originated through the pandemic-era CARES Act.
Between July 2019 and October 2025, prosecutors proved the defendants sought reimbursement for more than $13 million through false claims and submissions.
They successfully obtained more than $1.6 million.
That included $529,500 in Community Development Block Grant funds from Gwinnett County, Georgia; $429,885 in transportation funds through the Los Angeles County Metropolitan Transportation Authority; $283,000 in Emergency Solutions Grant funds from Kern County, California; and $379,149 in transportation funds through Raleigh, North Carolina.
New York audit helped uncover the scheme
The investigation illustrates another important part of the government’s effort to combat fraud: detecting questionable claims before money is paid.
According to the DOJ, the investigation began in late 2024 after Watts submitted claims seeking reimbursement of nearly $750,000 through the federal Section 5310 transportation program to the New York State Department of Transportation.
The New York State Comptroller’s Office found the invoices suspicious and began an audit.
Investigators said Watts and Pino-Copete responded by creating false documentation using stolen identities to convince auditors that Pearl Transit had performed the services for which it was seeking reimbursement.
The comptroller’s office brought in the U.S. Department of Transportation Office of Inspector General, which referred the investigation to federal prosecutors in 2025. HUD’s Office of Inspector General subsequently joined the investigation.
Investigators examining the defendants’ electronic devices found communications about creating false documentation, according to DOJ.
The resulting investigation expanded beyond New York and uncovered fraudulent activity involving federal funds administered in Georgia, North Carolina and California.
The jury ultimately convicted Watts and Pino-Copete of all crimes charged in the third superseding indictment presented at trial.
Watts was convicted of false statement, aggravated identity theft and five counts of wire fraud.
Both defendants were convicted of conspiracy to commit wire fraud, use of a false document, and aggravated identity theft.
Sentencing is currently scheduled for Jan. 21, 2027, before U.S. District Judge Anthony J. Brindisi.
DOJ says the defendants face a mandatory minimum of two years in prison and a maximum of 20 years, along with potential fines, supervised release, and restitution of at least $1.9 million.
The court will determine the actual sentences.
$65 million Medicaid scheme produces guilty plea
The Pearl Transit verdict was far from the only major fraud development announced Friday.
In another case, Ahsan Ijaz, 29, of Brooklyn, New York, pleaded guilty to conspiracy to commit health care fraud involving about $65 million in fraudulent Medicaid claims.
According to court documents, Ijaz owned two Brooklyn social adult day care centers — Happy Family Social Adult Day Care Center Inc. and Family Social Adult Day Care Center Inc. — as well as Responsible Care Staffing Inc., a home health care fiscal intermediary.
Federal prosecutors said that over approximately seven years, the businesses paid cash kickbacks and bribes to Medicaid recipients to induce them to enroll and then billed Medicaid for services that were not provided.
Some claims were submitted for services purportedly provided while recipients were outside the United States, according to DOJ.
Ijaz became the 10th defendant to plead guilty in connection with the investigation.
He is scheduled to be sentenced on March 10, 2027, and faces a statutory maximum of 10 years in prison. A federal judge will determine his actual sentence.
The Department of Health and Human Services Office of Inspector General, Homeland Security Investigations, and the New York Police Department investigated the case.
The National Fraud Enforcement Division’s Health Care Fraud Section is participating in the prosecution.
The scale of federal health care enforcement extends well beyond the Brooklyn case.
DOJ says its Health Care Fraud Strike Force Program has charged more than 6,200 defendants since 2007 who collectively billed federal health care programs and private insurers more than $45 billion.
The $45 billion figure represents billings associated with defendants charged through the program. It should not be interpreted as $45 billion successfully stolen or as a measure of proven losses in every case.
$11 million bank fraud conspiracy
Federal prosecutors in New Jersey announced guilty pleas Friday from two additional defendants in an alleged conspiracy involving stolen Treasury and commercial checks.
According to the DOJ, members of that conspiracy deposited or attempted to deposit more than 100 stolen checks worth more than $11 million between March 2023 and June 2025.
Some were U.S. Treasury checks involving Employee Retention Credits, the pandemic-era tax incentive created to help employers retain workers.
Prosecutors said participants obtained stolen checks, impersonated the businesses and individuals named as payees, created accounts and deposited the checks before distributing proceeds.
Ten defendants had pleaded guilty in the investigation as of Friday.
Charges against other defendants remained pending. Those defendants are presumed innocent unless and until proven guilty.
DOJ announces cases across the country
The Justice Department’s fraud-enforcement page listed numerous additional developments on Oct. 2.
They included a guilty plea in a more than $1.8 million bank-fraud scheme, charges involving alleged Social Security and pension fraud, an insurance-fraud guilty plea, sentencings connected to business-email fraud and prison sentences in a multistate bank-fraud scheme involving fake U.S. military identification.
The legal status of those cases varies considerably.
Some juries have convicted defendants. Others have pleaded guilty. Still others have merely been charged.
An indictment or criminal complaint is an accusation, not evidence of guilt, and defendants facing unresolved charges are presumed innocent unless proven guilty in court.
That distinction matters even more when dozens of federal enforcement actions are announced in the same period.
Federal fraud losses remain difficult to measure
The government’s push comes amid longstanding questions about how much fraud actually costs taxpayers.
GAO’s estimate of $233 billion to $521 billion in annual federal fraud losses was based on government data covering fiscal years 2018 through 2022.
The range represented approximately 3% to 7% of average federal obligations during the period.
But GAO itself cautioned that estimating fraud is inherently difficult.
Fraud is intentionally concealed. Agencies do not detect every scheme, and programs vary in vulnerability and oversight.
The period GAO examined also included the extraordinary expansion of federal spending during the COVID-19 pandemic, when the government rapidly distributed enormous amounts of money through newly created or expanded assistance programs.
The pandemic demonstrated what can happen when speed overwhelms traditional financial controls.
GAO separately estimated between $100 billion and $135 billion in fraud involving federal unemployment insurance programs from April 2020 through May 2023.
Those historical figures do not establish the level of fraud occurring in federal programs today.
They do, however, demonstrate the financial consequences when government programs distribute large amounts of money without adequate safeguards.
Fraud can exploit layers of government
The Pearl Transit prosecution provides a useful example of another challenge.
States, counties, cities, transit agencies, and other entities often administer federal money rather than receiving it directly from Washington.
That can create additional layers of oversight — but also additional points of vulnerability.
In the Pearl Transit case, federal transportation and housing money flowed through state and local administrators around the country.
It was ultimately scrutiny from New York auditors that helped expose the scheme.
That distinction matters because successful fraud enforcement is not solely about prosecuting offenders after money has been stolen.
Prevention depends on agencies verifying applicants, scrutinizing invoices, sharing information, and spotting suspicious patterns before authorizing payments.
The New York reimbursement claims demonstrate the value of that approach: auditors questioned the documentation rather than simply approving the requested payments.
Fox segment also covered separate China case
A Fox News segment discussing the DOJ fraud crackdown also included a report from correspondent Matt Finn concerning an unrelated California national-security prosecution.
That case involves Greg Lui, also known as Yiu Kong Lui, a California businessman accused of participating in a scheme to illegally send more than $300 million in export-controlled computer servers containing advanced U.S.-made graphics processing units to China.
Lui has been arrested and indicted.
He has not been convicted, and the charges against him remain allegations. He is presumed innocent unless proven guilty.
The California case is being handled as an export-control and national-security prosecution and is separate from the federal-program fraud conviction discussed by McDonald and the National Fraud Enforcement Division.
The two matters appeared in the same television segment but should not be conflated.
New enforcement strategy faces a much larger test
The Justice Department can point to significant cases as it expands its national fraud initiative.
The Pearl Transit verdict produced jury convictions in a scheme involving programs for vulnerable Americans. The Brooklyn Medicaid investigation has now resulted in 10 guilty pleas. Other federal prosecutors continue pursuing bank, Social Security, insurance and government-program fraud.
But individual prosecutions illustrate only part of the challenge.
Even at the low end, GAO’s historical estimate of $233 billion in annual federal fraud losses dwarfs the amounts recovered or protected through individual criminal cases.
That means the ultimate effectiveness of DOJ’s expanded strategy cannot be measured simply by the number of defendants charged.
A more meaningful test will be whether the government can prevent fraudulent payments, identify suspicious activity sooner, recover stolen money, and improve controls within programs that distribute taxpayer funds.
McDonald’s Oct. 1 directive makes clear that federal prosecutors intend to increase pressure on both individuals and corporations.
The enforcement announcements that followed demonstrate the breadth of the government’s current caseload.
Whether the new National Fraud Enforcement Division can translate that enforcement activity into a measurable reduction in fraud will take time to determine.
For now, however, DOJ is signaling that fraud involving government programs, health care, taxes and trade has become a major federal enforcement priority — and that prosecutors intend to pursue those cases across industries and jurisdictions nationwide.
