The Department of Justice (DOJ) recently announced a new initiative targeting cybersecurity-related fraud by government contractors and grant recipients…
The Department of Justice (DOJ) recently announced a new initiative targeting cybersecurity-related fraud by government contractors and grant recipients. The Civil Cyber-Fraud Initiative will rely on the DOJ’s existing enforcement authority under the False Claims Act (FCA).
“For too long, companies have chosen silence under the mistaken belief that it is less risky to hide a breach than to bring it forward and to report it. Well that changes today,” Deputy Attorney General Lisa Monaco said in remarks at Aspen Institute’s Cyber Summit. “We are announcing today that we will use our civil enforcement tools to pursue companies, those who are government contractors who receive federal funds, when they fail to follow required cybersecurity standards — because we know that puts all of us at risk. This is a tool that we have to ensure that taxpayer dollars are used appropriately and guard the public fisc and public trust.”
False Claims Act
In broad terms, the FCA imposes liability on any person who knowingly submits a false claim to the government or knowingly makes a false record or statement to get a false claim paid by the government. The FCA also imposes liability when false claims or statements are used to avoid having to pay money to the federal government. The law also contains qui tam provisions, which allow private persons to file suit for violations of the FCA on behalf of the government and to share in any recovery.
Although the FCA has been around since 1863, the government has stepped up enforcement and penalties in recent years. The DOJ’s latest initiative springs from a comprehensive review designed to develop actionable recommendations to enhance and expand the Justice Department’s efforts against cyber threats. According to the agency, it plans to rely on the FCA to pursue cybersecurity-related fraud by government contractors and grant recipients. “We will extract very hefty fines,” Monaco said. “We will protect whistleblowers who bring those violations and those failures forward.”
New Cybersecurity Enforcement
The new initiative will be led by the Civil Division’s Commercial Litigation Branch, Fraud Section, whose goal will be to hold entities accountable when they put federal agency information or systems at risk “by knowingly providing deficient cybersecurity products or services, knowingly misrepresenting their cybersecurity practices or protocols, or knowingly violating obligations to monitor and report cybersecurity incidents and breaches.”
According to the DOJ, the benefits of the initiative will include:
Building broad resiliency against cybersecurity intrusions across the government, the public sector and key industry partners.
Holding contractors and grantees to their commitments to protect government information and infrastructure.
Supporting government experts’ efforts to timely identify, create and publicize patches for vulnerabilities in commonly-used information technology products and services.
Ensuring that companies that follow the rules and invest in meeting cybersecurity requirements are not at a competitive disadvantage.
Reimbursing the government and the taxpayers for the losses incurred when companies fail to satisfy their cybersecurity obligations.
Improving overall cybersecurity practices that will benefit the government, private users and the American public.
Key Takeaway
The DOJ is the latest federal agency to use its existing authority to crack down on companies that fail to adopt adequate cybersecurity standards. To avoid costly liability, we encourage businesses that contract with the federal government to thoroughly review their cybersecurity protocols and breach notification procedures.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, Thomas Herndon, Jr., or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
Secured transactions form the backbone of a wide range of business dealings, including business loans, mortgages, and inventory financing. Because the stakes are often high and relatively minor oversights can have drastic consequences, lenders and borrowers should thoroughly understand how to form an enforceable security agreement that protects their legal rights. What Is a Secured […]
Don’t Cash a “Paid in Full” Check Without Understanding the Legal Implications
Cashing a check marked “paid in full” can be a risky endeavor, particularly if you don’t fully understanding the legal implications. If you are owed more than the amount of the check you accept and deposit, you may waive your right to collect the full disputed amount. That is why you should consider either rejecting […]
Changes to Qualified Small Business Stock Will Benefit Startup Founders and Investors
The One Big Beautiful Bill Act of 2025 (OBBBA) significantly impacts federal taxes, credits, and deductions. A key change relating to Qualified Small Business Stock (QSBS) allows greater tax-free gains for investments in startups and other qualifying small businesses. Company founders and other investors should understand how the enhanced tax strategy works or risk missing […]
Corporate Consolidation and Antitrust Issues in Mergers
Corporate consolidation involves two or more businesses merging to become a single larger entity. The result is often a stronger and more competitive company that can better navigate today’s competitive marketplace. What Is Corporate Consolidation? Corporate consolidation closely resembles a basic merger transaction. The primary difference is that a consolidation creates an entirely new business […]
Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
