Fraud

State of play.

• The FTC has obtained a court order freezing a $250M subscription-fraud network — the Genesis Tech action targets 15 corporations and eight individuals operating through shell companies and offshore entities, alleging ROSCA and FTC Act violations across apps including MadMuscles, Nebula, and PDF Guru .
• FTC loss data confirm the fraud environment is worsening at scale: Americans reported $15.9 billion in total fraud losses in 2025, with imposter scams alone accounting for $3.5 billion — a trajectory that signals sustained regulatory and enforcement focus across all channels .
• The Biglaw insider trading ring remains the dominant criminal development: 30 defendants charged across Sidley, Latham, Cleary, Goodwin, Weil, Willkie, and Wachtell, with nine guilty pleas, named co-conspirators still employed at Biglaw firms as recently as 2026, and the investigation explicitly ongoing .
• Super Micro's export-control indictment has compounded into a multi-front exposure: DOJ charges against three individuals for diverting $2.5 billion in AI servers to China sit on top of prior Nasdaq delisting, SEC accounting charges, BDO's adverse internal-controls opinion, and active investor class actions .
• For counsel advising technology companies, subscription-service operators, or financial-services clients, the practical baseline is simultaneous exposure across criminal, civil, and regulatory channels — subscription-fraud enforcement is now targeting international corporate structures, AI-platform consumer claims are entering federal court, and prediction-market insider trading has produced its first criminal charges.

Where things stand.

• FCA enforcement is at record levels and expanding in scope. DOJ FY2025 recoveries of $6.8 billion — the highest ever — are anchored in healthcare but now explicitly extend to DEI employment practices through the Civil Rights Fraud Initiative, with the IBM $17 million settlement as the template for qui tam plaintiffs .
• The FOCUS initiative formalizes data-miner qui tam partnerships. Data miners filed a record 1,297 FCA cases in FY2025 and accounted for over 45 percent of complaints since FY2024; FOCUS creates a pre-filing consultation channel that DOJ will use to triage quality and potentially strengthen enforcement posture against weaker algorithmic suits .
• Healthcare fraud enforcement has a new geographic and structural footprint. The West Coast Strike Force adds Northern California, Arizona, and Nevada to an existing nine-district model; CMS is running predictive audits on hospice providers and has imposed an accelerated Medicaid provider revalidation mandate on all states; and the Eleventh Circuit has expanded criminal exposure for false ownership disclosures on CMS-855 enrollment forms .
• Subscription-fraud enforcement is targeting international corporate structures. The Genesis Tech action demonstrates that the FTC will pursue asset freezes and individual liability against offshore-structured networks exploiting app-store enforcement gaps; ROSCA is the primary statutory vehicle .
• Prediction markets are now a regulated enforcement zone. The CFTC's first insider-trading action on event contracts, combined with the DOJ's commodities-fraud prosecution of the Google engineer charged over Polymarket bets using confidential search data, establishes that existing commodities and securities fraud frameworks apply to these platforms .
• Law firm liability in Ponzi scheme recoveries is being quantified. A jury found Baker Donelson liable for negligent supervision in connection with a $164.5 million Mississippi timber Ponzi scheme; the receiver is seeking at least $2.8 million in damages — a data point for how courts value firm-level exposure in fraud recoveries .
• PFAS omission claims are clearing the pleading stage. In Cavalier v. Apple, a Northern California federal court preserved fraudulent concealment, UCL, false advertising, and CLRA claims — accepting an omission-based theory without explicit "PFAS-free" marketing and permitting a potentially nationwide class based on representative testing .
• Whistleblower infrastructure is expanding on multiple fronts. The GAO has validated whistleblower program efficiency; FinCEN has proposed awards of 10-30% for AML and sanctions violations; and the SEC's narrow "voluntary" disclosure standard — denying an award to the Deutsche Bank ESG whistleblower who published in the WSJ before filing — remains a contested interpretive question .
• AI-powered wire fraud has become the dominant financial crime vector. According to FBI IC3 data cited in practitioner reporting, cybercrime losses reached $16.6 billion in 2024; business email compromise has surged since generative AI became widely available; and Deloitte projects GenAI deepfake fraud losses could reach $40 billion in the US by 2027 .
• The Second Circuit has narrowed insurers' ability to deny no-fault claims based on provider kickbacks. The panel vacated GEICO's summary judgment win and certified to the New York Court of Appeals whether anti-kickback violations automatically disqualify providers from no-fault reimbursement eligibility; hundreds of similar cases are in limbo pending the state court's answer .
• State AGs are enforcing consumer-fraud theories through existing statutes. State AG offices have expanded antitrust and consumer protection enforcement, with the False Claims Act now carrying a first-of-its-kind DEI-related resolution and healthcare providers facing heightened scrutiny .

Latest developments.

• FTC obtains court order freezing Genesis Tech subscription-fraud network — 15 corporations, eight individuals, $250M in app revenue, $700M in connected PayPal flows, ROSCA and FTC Act violations alleged .
• FTC reports $3.5 billion in imposter scam losses in 2025, with total reported fraud losses reaching $15.9 billion across 3 million consumer reports .
• Anthropic faces federal class action over Claude Max plan usage limits — complaint alleges deceptive marketing of $100/month and $200/month subscription tiers that failed to deliver advertised usage multiples .
• FTC and California DFPI begin distributing $2.8 million in refunds to 1,821 homeowners victimized by Golden Home Services and related mortgage relief scams; individual defendants banned from telemarketing and debt relief industries .
• Baker Donelson jury verdict on negligent supervision in $164.5 million Mississippi timber Ponzi scheme; receiver seeks at least $2.8 million in damages .
• Google engineer charged with commodities fraud, wire fraud, and money laundering for allegedly using confidential search data to place Polymarket bets and profit more than $1 million .
• Former DC federal prosecutor Nicholas Miranda joins Levin Law to lead complex class actions and arbitrations targeting financial fraud and privacy violations — a signal of how plaintiffs firms are building prosecution-side expertise for civil fraud litigation .
• AGG publishes May 2026 enforcement update flagging first-of-its-kind FCA resolution tied to DEI-related misconduct and expanding state AG enforcement role .
• Cavalier v. Apple PFAS omission claims survive dismissal — N.D. Cal. preserves fraudulent concealment, UCL, false advertising, and CLRA claims; nationwide class permitted on representative testing theory .

Active questions and open splits.

• Biglaw information-barrier liability after the Nourafchan ring. The indictment names seven elite firms and references unnamed co-conspirators still employed at Biglaw institutions; the open question is whether DOJ pursues civil actions against the firms themselves and whether the case triggers regulatory scrutiny of information-barrier protocols industry-wide .
• Prediction-market insider trading — what theory governs. The Google engineer prosecution charges commodities fraud and wire fraud rather than securities fraud; the legal theory for nonpublic corporate data used in prediction markets has no settled precedent, and the outcome will define employee-trading policies for every data-rich employer .
• AI subscription misrepresentation — what disclosure standard applies. The Anthropic class action tests whether usage-cap disclosures buried in terms of service satisfy consumer protection standards when marketing materials promise specific usage multiples; no settled standard exists for AI-platform subscription terms, and a class certification ruling would set the template .
• PFAS omission liability without affirmative "PFAS-free" claims. Cavalier v. Apple accepted a function-conflict theory — chemical contamination inconsistent with health-focused marketing — without requiring explicit false statements; whether other circuits follow and how broadly courts define "health-oriented" product categories remains open .
• Whether the DEI-FCA enforcement theory survives constitutional challenge. The IBM settlement establishes the DOJ's theory, but a coalition challenge to EO 14398 is pending; an injunction would freeze the DEI-FCA enforcement vector while denial would accelerate qui tam filings .
• No-fault reimbursement eligibility after kickback violations. The Second Circuit's certification to the New York Court of Appeals leaves hundreds of similar cases in limbo; insurers cannot rely on categorical disqualification while providers facing kickback allegations have strengthened reimbursement defenses pending the state court's answer .
• Law firm negligent supervision exposure in fraud recoveries. The Baker Donelson damages proceeding will produce a quantification methodology for firm-level liability in Ponzi scheme cases — the first significant data point for how receivers value supervision failures at major firms .

What to watch.

• Genesis Tech preliminary injunction proceedings — whether the court's asset freeze withstands challenge given the defendants' offshore corporate structures, and what asset-recovery mechanisms the FTC deploys against international entities.
• Anthropic class action — early motions practice on whether usage-cap disclosures satisfy consumer protection standards, and whether other AI platforms face parallel filings.
• Expansion of the Biglaw insider trading investigation — whether DOJ unseals additional defendants, pursues civil actions against implicated firms, or triggers bar disciplinary proceedings against named attorneys.
• New York Court of Appeals answer to the Second Circuit's certified question on no-fault reimbursement eligibility — the ruling will reset leverage in hundreds of pending no-fault fraud cases.
• Outcome of the constitutional challenge to EO 14398 and FAR clause 52.222-90 — an injunction would freeze the DEI-FCA enforcement vector; denial accelerates qui tam filings.
• Google engineer Polymarket prosecution — how DOJ frames the commodities fraud theory at trial and whether the case produces guidance on employee trading policies for data-rich technology employers.