DOJ Resolves First DEI-Related False Claims Act Matter with IBM for $17 Million

Settlement marks the first FCA resolution secured under the Civil Rights Fraud Initiative targeting government contractors' diversity, equity, and inclusion practices.

Apr. 15, 2026 at 9:33pm

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The Department of Justice (DOJ) has announced the first False Claims Act (FCA) resolution secured under its Civil Rights Fraud Initiative. The $17 million settlement resolves allegations that International Business Machines Corporation (IBM) violated the FCA by failing to comply with anti-discrimination requirements in its federal contracts due to practices the government contends discriminated against employees and applicants based on race, color, national origin, or sex.

Why it matters

This settlement demonstrates the Trump administration's efforts to target diversity, equity, and inclusion (DEI) initiatives in the private sector, using the FCA to stop practices it deems discriminatory. It signals an active area of enforcement, with the DOJ viewing non-compliance with federal anti-discrimination laws as a basis for FCA liability, even without specific DEI-related contract certifications.

The details

The 'Covered Conduct' alleged by the DOJ includes: using race, color, national origin, or sex as factors in compensation, hiring, transfer, and promotion decisions; setting demographic goals for business units and considering protected characteristics to achieve those goals; and offering certain training, mentorship, and development programs only to employees of certain races, colors, national origins, or sexes. These practices date back to January 2019.

  • The DOJ announced the settlement on April 10, 2026.
  • The 'Covered Conduct' alleged by the DOJ occurred as far back as January 1, 2019.

The players

International Business Machines Corporation (IBM)

A multinational technology and consulting company that was the subject of the DOJ's first FCA settlement related to diversity, equity, and inclusion practices.

Department of Justice (DOJ)

The U.S. federal government agency that announced the $17 million settlement with IBM and established the Civil Rights Fraud Initiative to investigate and pursue FCA claims against government contractors over alleged civil rights violations.

President Trump

The former U.S. president who issued Executive Order 14173 in 2025, signaling the administration's intent to use the FCA to target diversity, equity, and inclusion programs that violate federal anti-discrimination laws.

Todd Blanche

The former Deputy Attorney General who established the DOJ's Civil Rights Fraud Initiative in May 2025, leading the effort to pursue FCA claims against government contractors over alleged civil rights violations.

Stanley Woodward

The former Associate Attorney General who announced the IBM settlement, stating the DOJ's commitment to ensuring companies are not using taxpayer-funded work to further 'woke unconstitutional practices' in American workplaces.

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What they’re saying

“Today's settlement proves this Department's commitment to ensure companies are not using taxpayer funded work to further woke unconstitutional practices in American workplaces.”

— Stanley Woodward, Associate Attorney General

“The DOJ launched the Civil Rights Fraud Initiative to root out this misconduct, hold offenders accountable, and end this practice for good.”

— Todd Blanche, Acting Attorney General

What’s next

Contractors should review their diversity, equity, and inclusion policies and practices with the help of legal counsel to ensure compliance with federal anti-discrimination laws and minimize the risk of FCA liability.

The takeaway

This settlement marks a significant escalation in the Trump administration's efforts to target diversity, equity, and inclusion initiatives in the private sector, using the False Claims Act as a tool to enforce its view on what constitutes lawful DEI practices. Government contractors must be vigilant in reviewing and revising their policies to avoid similar enforcement actions.