Welcome to the October 2026 edition of The BR Investigations and Enforcement Forum (“B.R.I.E.F.”), Blank Rome’s monthly newsletter highlighting enforcement priorities and compliance risk issues impacting businesses domestically and abroad. B.R.I.E.F. delivers concise insights into boardroom resilience, regulatory and sanctions developments, internal investigations, enforcement trends, and evolving financial crime risks.

We invite you to share this resource with colleagues and visit our White Collar Defense & Investigations webpage to learn more about our team.

October 2026 Enforcement Overview

If the summer was about building the U.S. Department of Justice’s (“DOJ”) National Fraud Enforcement Division (the “Fraud Division” or the “Division”), October was about putting it to work. In roughly three weeks, the Division issued two directives on corporate enforcement and prosecutorial directives, joined with the U.S. Department of Health and Human Services Office of the Inspector General (“HHS-OIG”) to give companies a single place to self-report criminal health care fraud, rolled out a whistleblower program that pays tipsters when charges are filed, and told the defense bar it is using artificial intelligence (“AI”) and data analytics to find fraud. Meanwhile, the DOJ’s Criminal Division named a new second-in-command as it works to keep the prosecutors it still has.

Treasury, for its part, delivered the largest anti-money laundering (“AML”) resolution of the year against Bank of America, and the U.S. Commodities and Futures Trading Commission (“CFTC”) kept up its pursuit of large retail frauds.

Lead Stories: DOJ Updates

Algorithms, Analysts, and the Disclosure Clock

Six months after its April launch, the Fraud Division is no longer describing itself as a start-up. Two of its Deputy Assistant Attorneys General (“DAAG”), Peter L. Cooch and Nicholas J. Schilling Jr., recently made clear that the Division intends to find corporate fraud on its own, and to do it faster than before. 

The engine behind that ambition is the National Fraud Detection Center (“NFDC”), launched on August 24, 2026, and described by DOJ as a prosecutor-led unit of agents, data scientists, and subject-matter experts that generates data-driven leads across program priority areas. Assistant Attorney General (“AAG”) Colin McDonald called its creation “a decisive shift in how the federal government detects and investigates complex fraud.” The NFDC now draws on roughly 20 federal agency partners and about a dozen inspector general offices. DOJ is now connecting tax, trade, healthcare, and benefits data in ways many companies do not. DAAG Schilling described the Division as pursuing every available route to bring AI and analytics into detection, investigation, and prosecution, consistent with the Division’s August 13 priorities memorandum, which paired its tax and healthcare agendas with data analytics and a cross-disciplinary team of data scientists. With more than 500 prosecutors already on board, the Division has the capacity to act on the data.

DAAG Cooch anticipated that AI will increasingly sit inside compliance workflows and that prosecutors evaluating a problem will ask whether AI played a role and how it was deployed. Since September 2024, DOJ’s Evaluation of Corporate Compliance Programs has asked how companies govern the use of AI in both their business and their compliance functions, but now the question comes from the component responsible for the bulk of corporate fraud cases. On self-disclosure, DAAG Cooch said that the Division is still calibrating its incentives, while promising that future declination and resolution announcements will explain DOJ’s reasoning in greater detail. He also offered a reminder that misconduct by an employee does not automatically translate into a corporate case.

DOJ's First "Near Miss" NPA: Late Disclosure, Still Rewarded

On October 27, DOJ's National Security Division announced a non-prosecution agreement with Extreme Networks, Inc., which will pay $975,721.84 in criminal penalties over sanctions and export control violations. From roughly 2018 to 2022, the company's former Russian subsidiary sold networking equipment and services to Russian weapons maker MMZA without an OFAC license. Extreme Networks only came forward once a news outlet was about to break the story, which made the disclosure untimely. However, complete cooperation and prompt fixes earned the company "Near Miss" status under DOJ's 2026 Corporate Enforcement and Voluntary Self-Disclosure Policy. It is the first time DOJ has resolved a near-miss case with an NPA. OFAC took a different view of the same facts. It treated the disclosure as voluntary—OFAC has no near-miss policy like DOJ—calling the conduct egregious—and reached a $1,529,685 settlement. The DOJ payment counts toward that amount. OFAC also pointed to warning signs the company missed, such as orders naming one end user while listing MMZA's email addresses or Moscow office. 

A Securities Prosecutor Takes the Criminal Division’s Operational Helm

On October 15, former Southern District of New York (“SDNY”) securities prosecutor Adam Hobson became Acting Principal DAAG of the Criminal Division, succeeding Mac D. Heavener III and taking day-to-day charge of the Division’s 16 sections under AAG A. Tysen Duva. Hobson led SDNY’s Celsius prosecution of Alex Mashinsky and the $185 million Legend Venture Partners pre-initial public offering (“IPO”) case.

Manhattan D.A. Launches Corporate Crime and Antitrust Task Force

As federal white-collar enforcement narrows its focus toward fraud on government programs, the Manhattan District Attorney’s Office is moving to fill some of the space. On October 14, District Attorney (“DA”) Alvin L. Bragg, Jr. announced the Office’s first Corporate Crime and Antitrust Task Force, which will pursue complex fraud and misconduct by corporations and their executives, including antitrust violations and healthcare and other consumer fraud. Bragg framed the mission as going after “the high-level actors, corporations, and structures that enable and profit from crime.” The Task Force is led by Matthew Bogdanos, a 40-year veteran of the DA’s Office, with about five Assistant DAs and two investigative analysts, and it will draw on the Office’s investigators, forensic accountants, and Financial Intelligence Unit, which analyzes Financial Crimes Enforcement Network (“FinCEN”) data.

The Task Force adds to a growing group of state enforcers, including California and Massachusetts, that are strengthening criminal antitrust enforcement.

Directive 26-12: The Fraud Division’s Corporate Charging Playbook

Directive 26-12, issued October 1 by AAG Colin M. McDonald, is less a new policy than a guide to how the Fraud Division will apply existing policies. Prosecutors remain bound by the Principles of Federal Prosecution of Business Organizations and the Department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy, but the Directive tells them how to weigh those frameworks across the Division’s healthcare, government, tax, and trade priorities. The Division describes this as an “aggressive, all-tools approach.”

The core of the Directive is a list of 10 factors to receive “great weight,” including management knowledge or involvement; concealment from regulators or auditors; schemes lasting at least three years, reaching at least three districts, causing $25 million or more in loss, or harming 25 or more victims; risks to Americans’ safety or security; offenses involving sending U.S. dollars to foreign adversaries; and immigration offenses. Four categories of fraud are prioritized: healthcare, public trust and procurement, revenue evasion, and tariff, import, and forced-labor fraud. The Directive also centralizes oversight. Every ongoing corporate fraud matter must be reported to the Corporate Enforcement Section, and that Section will monitor compliance with corporate resolutions.

Directive 26-13: Seize Early, Charge Broadly

A week after Directive 26-12, AAG McDonald issued Directive 26-13 describing how cases are to be pursued. Prosecutors are to bring tax, securities fraud, consumer fraud, and cybercrime charges together where possible, use pre-indictment seizures, take down digital infrastructure to freeze money before it moves, and press for cooperators, detention where warranted, and strong sentencing advocacy. DOJ ties the urgency to the U.S. Government Accountability Office (“GAO”) estimates that fraud costs the government $233 billion to $521 billion a year.

Consolidated Healthcare Disclosures

Healthcare companies have long had to decide whether to go to DOJ, HHS-OIG, or both when they uncover a problem. A joint policy issued October 15 settles the question. A company that self-reports potentially criminal conduct affecting a federal healthcare program to the Fraud Division’s Health Care Fraud Section will receive the benefits of HHS-OIG’s Self-Disclosure Protocol automatically. The reverse does provide the same benefit. HHS-OIG’s updated protocol now says criminal matters belong at DOJ, and a disclosure made only to HHS-OIG generally will not count as a voluntary self-disclosure to DOJ for presumptive declination purposes. AAG McDonald warned that companies that conceal what they know should expect “a very different conversation.”

Paying Tipsters When the Indictment Is Filed

Most government whistleblower programs make tipsters wait years, until forfeiture and appeals are over. The Fraud Whistleblower Incentive Program (“WHIP”), announced October 20 by DOJ and promoted the same day by the President and Vice President, takes a different approach. WHIP awards of $10,000 to $30,000 become available immediately when criminal charges are filed. The program covers federal healthcare offenses and fraud on programs run by the Departments of Agriculture, Labor, HHS, Housing and Urban Development, Education, Veterans Affairs, and War, and the Small Business Administration, with hospice, home health, day care, and special services fraud singled out. Tips are submitted through Fraud.gov, and Treasury has committed $25 million to the program. Participants remain eligible to seek larger awards under other programs, including the Criminal Division’s Corporate Whistleblower Awards Pilot Program. 

The First National Tax Enforcement Surge

Criminal tax enforcement, now part of the Fraud Division, conducted its own coordinated surge this fall. From early September to October 14, the Division’s Tax Section, Internal Revenue Service Criminal Investigation (“IRS-CI”), and 35 U.S. Attorneys’ Offices brought actions against 76 defendants with more than $490 million in estimated intended revenue loss. That total includes 23 new charging actions against 31 defendants. The largest matter is a Northern District of Texas indictment of four promoters of a trust shelter that allegedly hid more than $1.5 billion in income and cost the IRS over $200 million. Many of the other cases involve COVID-era credits and unpaid employment taxes. AG Todd Blanche called the results “only the tip of the iceberg.”

Insider Trading Reaches Crypto Derivatives

SDNY prosecutors have filed criminal complaints against two former Robinhood Markets engineers who allegedly used confidential information about which crypto assets the platform planned to list to trade crypto perpetual futures ahead of the announcements. Each is alleged to have made more than $50,000, and the case has been described as one of the first criminal insider trading prosecutions in perpetual futures markets. The matter surfaced through Robinhood’s own internal investigation and referral to law enforcement.

Regulatory Enforcement

Bank of America Settlement

Treasury’s October 13 resolution with Bank of America is the largest AML enforcement event of 2026 so far. Three agencies acted together. FinCEN imposed a $1.2 billion penalty, the third-largest in Treasury’s history, for the bank’s failure to address and report priority national security risks such as Chinese money laundering networks and southwest-border illicit finance. The Office of the Comptroller of the Currency (“OCC”) imposed a $750 million penalty, its largest ever, for an ineffective Bank Secrecy Act (“BSA”)/AML program. The Office of Foreign Assets Control (“OFAC”) settled 475 apparent violations of programs including Iran, Russia, narcotics, and terrorism for $11.6 million.

Treasury’s findings center on the bank’s reliance on others. The bank admitted willful BSA violations and late reporting of more than $5 billion in suspicious activity, over $1 billion of it tied to priority risks. Treasury found that the bank had leaned on law enforcement requests and referrals from other banks instead of its own monitoring, and had continued to do so after internal testing exposed the problem. The OCC added that the bank fell short even after a December 2024 cease-and-desist order. OFAC gave no credit for remediation or cooperation. Treasury has made clear that subpoenas and referrals from other banks cannot take the place of an institution’s own monitoring. Compliance leaders should track how many suspicious activity reports (“SARs”) come from internal alerts compared with outside triggers, and should act on adverse testing results promptly rather than simply recording them.

Iran and the A7 Network

Two Treasury actions highlight the risk facing non-U.S. banks and crypto intermediaries. On October 1, OFAC designated the A7 Network as a transnational criminal organization, and FinCEN issued FIN-2026-Alert007 with red flags and SAR filing guidance. FinCEN describes the network as including three OFAC-sanctioned Russian companies and links it to a move of funds to Grinex, a Kyrgyzstan-based successor exchange. Four days later, as part of the “Operation Economic Outcast” campaign begun in August, OFAC told foreign financial institutions still dealing with Iran that they could be sanctioned without warning and should end those relationships now.

Treasury then widened the campaign beyond banks and ships to their professional advisers. On October 21, OFAC designated Karnakis & Karnakis, a law firm based in Greece and Panama that Treasury says has supported illicit Iranian shipping for years, along with shipping agents and nine vessels. OFAC issued Iran General License GG to allow a wind-down of dealings with the law firm. The same day, FinCEN served an administrative subpoena to advance an investigation of an unnamed Greek bank over potential ties to Iran, and sent requests for information to six other unnamed European banks about their relationships with OFAC-designated Iranian financial institutions. A week earlier, on October 15, OFAC had designated Iraq-based International Development Bank for Investment and Finance, together with two offshore Iranian banks, Jazireh International Bank Company and Chabahar International Bank Overseas Company.

CFTC Raises the Bar for “Mention Market” Event Contracts

On September 22, 2026, CFTC staff issued an advisory telling designated contract markets that event contracts settling on whether a named individual says certain words, attends an event, or interacts with someone are presumptively susceptible to manipulation and will face stricter review before listing. The advisory follows the CFTC’s first prediction-market manipulation settlement in July and its August order against a trader for insider trading in Mention Market contracts. For exchanges, listing these products now requires a stronger record on surveillance and manipulation controls. For companies, these developments provide another reason to update insider trading policies to cover event contracts expressly.

SEC Roundup: Pre-IPO Fraud, Cherry-Picking, and Broker-Dealer Controls

The SEC’s most notable October matters centered on retail investors. On October 9, the agency charged two former Linqto executives with misleading the retail investors who used the platform to buy into pre-IPO “unicorn” companies.  A Linqto subsidiary sold more than $430 million in these investments. On October 6, it moved for a consent judgment against former Western Asset co-CIO Ken Leech that, if approved, would return $103 million to harmed investors and impose a $3 million penalty. Two settled actions targeted compliance infrastructure. J.P. Morgan entities resolved charges on October 2 that a statutorily disqualified person was involved in its security-based swap transactions, and on October 9 Jefferies admitted that about 7,700 blue sheet submissions contained inaccurate or missing data covering at least 1.2 million transactions, paying a $650,000 penalty.

Civil FCA Exposure Runs Alongside the Criminal Healthcare Push

Criminal healthcare enforcement is not displacing the False Claims Act (“FCA”). On October 7, DOJ announced that Heal 360 urgent and primary care clinics and their owner agreed to pay $20 million to resolve FCA allegations tied to the COVID-19 Uninsured Program. Earlier, on September 11, a Florida eye practice and its physician owner paid $350,000 and admitted the facts underlying allegations of false Medicare and Veterans Affairs claims. Providers should assume that conduct reviewed by the Fraud Division may also be pursued civilly.

Blank Rome News & Notes

Jennifer Achilles on Insider Trading in Prediction Markets

Event contracts are attracting enforcement attention. In an October 14 alert, partner Jennifer L. Achilles explains why the CFTC, often working alongside DOJ, is treating insider trading in prediction markets as a priority and what platforms and traders should do now. Her September 21 co-authored alert examines the new SEC-FDA agreement and the closer scrutiny it brings to FDA-related disclosures by public companies.

Lawdragon Recognition for Blank Rome Litigators

Several Blank Rome partners were named to the 2027 Lawdragon 500 Leading Litigators in America, as the firm announced on September 15. The recognition follows the July inclusion of 11 Blank Rome lawyers in Lawdragon’s inaugural guide to leading global investigations lawyers. Read more >>

Jennifer Achilles and Linda Imes on Sharing Investigation Findings with DOJ

On November 19, partners Jennifer L. Achilles and Linda Imes will present a myLawCLE webinar on how company counsel can share investigation findings with DOJ to qualify for cooperation credit and minimize the risk of waiving privilege. DOJ's March 2026 Corporate Enforcement Policy ties cooperation credit to attributing facts to specific sources, and every attribution can lead to waiver. Jennifer and Linda will lay out a working framework under Upjohn and Hickman v. Taylor for separating facts from communications, and fact work product from opinion work product. They will also cover do's and don'ts for drafting interview memos, a strategy for meeting DOJ's attribution demands while keeping privilege intact, and how to oppose the waiver motion that often follows. Read more >>

© 2026 Blank Rome LLP. All rights reserved. Please contact Blank Rome for permission to reprint. Notice: The purpose of this update is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This update should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.