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As Deputy Attorney General (DAG) Lisa Monaco recently observed, "[g]oing back to the days of 'Wanted' posters across the Old West, law enforcement has long offered rewards to coax tipsters out of the woodwork." On Aug. 1, 2024, the Department of Justice (DOJ or Department) joined the club of federal law enforcement agencies that have adapted this approach to white-collar crime by launching its own three-year Whistleblower Pilot Program. The Whistleblower Pilot Program will provide monetary awards to whistleblowers who provide the Department with original and truthful information about certain types of corporate misconduct that leads to a successful asset forfeiture. If the success of other government whistleblower programs, such as the one administered by the Securities and Exchange Commission (SEC), is any measure, the DOJ can be expected to see a surge of reports alleging corruption, money laundering and other corporate fraud. If this is not enough reason for companies to take a fresh look at their compliance programs to ensure they are effective at quickly detecting and remediating misconduct, the DOJ simultaneously amended the Criminal Division's Corporate Enforcement and Voluntary Self-Disclosure Policy (Corporate Enforcement Policy) to allow companies the opportunity for full voluntary self-disclosure benefits even after the DOJ receives a whistleblower tip — so long as the company self-reports that conduct to the DOJ within 120 days of receiving an internal report and before the DOJ contacts the company. While on the one hand, the DOJ is clearly sending a message to employees that if they see something, say something, as DAG Monaco stated to companies in no uncertain terms, "[o]ur message is equally clear: knock on our door before we knock on yours."
As stated in the program guidance, the Whistleblower Pilot Program's purpose is to fill gaps in the coverage of information that the DOJ has obtained and used for its investigations and prosecutions from already-existing whistleblower programs run by agencies like the SEC and the Commodity Futures Trading Commission and from individuals who bring qui tam actions under the False Claims Act (FCA). However, DAG Monaco noted that the legislative jurisdiction of these preexisting whistleblower programs is like a "patchwork quilt that doesn't cover the whole bed. They simple don't address the full range of corporate and financial misconduct that the [DOJ] prosecutes." In order to do so, the DOJ designed the Whistleblower Pilot Program to encourage tips in four areas not covered by other whistleblower programs:
In order for an individual who reports misconduct in one of these four areas to qualify for an award under the Whistleblower Pilot Program, the individual must meet a number of criteria:
Regarding compensation, awards can be up to 30% of the first $100 million of a successful forfeiture and 5% of proceeds between $100 million and $500 million. A "successful forfeiture" is when the Department obtains a final order of forfeiture, a civil judgment of forfeiture or an administrative declaration related to assets obtained and those assets are deposited in the Assets Forfeiture Fund. All awards are issued at the sole discretion of the Department. In deciding the amount of the award, the Department considers various factors, including the significance of the information reported, the whistleblower's participation in internal compliance systems by reporting internally first and the whistleblower's cooperation with law enforcement. In the fact sheet published with the announcement of the Whistleblower Pilot Program, the DOJ also noted that if it learns that any person or entity takes any action to prevent a whistleblower from making a report, the DOJ could open a criminal investigation into obstruction of justice.
The Whistleblower Pilot Program is the latest of a series of new or updated policies announced by the DOJ within the past two years designed to encourage self-disclosure by both individuals and companies. In January 2023, the DOJ announced significant amendments to the Corporate Enforcement Policy, which increased incentives for companies to voluntarily self-disclose misconduct, fully cooperate, and timely and appropriately remediate by broadening the availability of a presumption of declination and reduction of financial penalties. In October 2023, the DOJ announced a Department-wide Mergers and Acquisitions Safe Harbor Policy, which provides a presumption of declination to acquiring companies that voluntarily disclose criminal misconduct discovered at the acquired entity within a safe harbor period, cooperate with an ensuing investigation, and engage in requisite, timely and appropriate remediation. Finally, earlier this year, the DOJ announced a pilot program on voluntary self-disclosure for individuals, under which culpable individuals who fully cooperate and voluntarily provide the Criminal Division with information on certain types of corporate and white-collar offenses may receive a non-prosecution agreement in exchange for their cooperation. Now non-culpable individuals who provide reports of certain corporate misconduct to the DOJ can qualify for substantial financial benefits. The corresponding amendment to the Corporate Enforcement Policy, which gives companies the opportunity to qualify for a presumption of declination so long as they report to the DOJ within 120 days after receiving an internal report and before the DOJ reaches out to them, provides another strong incentive for corporate self-disclosure.
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