Kerik, a former business partner of former New York Mayor Rudy Giuliani, faces possible charges including tax evasion and conspiracy to commit wiretapping, the newspaper said.
President George W. Bush nominated Kerik as homeland security secretary in 2004 after Giuliani personally recommended Kerik for the job. Kerik withdrew his nomination following revelations that he failed to pay Social Security taxes for a nanny.
Giuliani subsequently admitted it had been a mistake to recommend Kerik for the post.
Citing legal sources, the Post said prosecutors have told Kerik's attorneys they are preparing to charge Kerik with filing false information to the government in connection with his Cabinet nomination.
Giuliani is in no legal jeopardy, legal sources told the newspaper, but the case could complicate Giuliani's campaign for the 2008 presidential nomination.
Kerik rejected an offer to plead guilty to charges that would have required him to serve prison time. His attorney, Kenneth Breen, told the newspaper his client had done nothing wrong.
"He's not going to plead to something that he didn't do," Breen said.