US Department Of Justice Announces Sprint Towards New Whistleblower Reward Program - Whistleblowing

On March 7, 2024, the Deputy Attorney General of the US Department of Justice ("DOJ" or "Department") announced a pilot program to encourage whistleblowers to report evidence of high-priority white collar crimes with the potential to recover financial rewards from any funds forfeited as part of a resulting criminal enforcement action.

Covering Gaps in Existing Whistleblower Programs

As Deputy Attorney General Lisa O. Monaco (DAG Monaco) noted, a number of existing reward programs to encourage whistleblowers have proven extraordinarily effective in increasing the flow of information regarding potential corporate crime to investigative agencies. This includes programs run by the US Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), Internal Revenue Service, and Financial Crimes Enforcement Network, as well as qui tam actions under the False Claims Act (which offer their own whistleblower incentives). The most significant of these programs, the SEC's whistleblower program, received a new record of more than 18,000 tips in 2023 and has paid out more than $1.9 billion to hundreds of individual whistleblowers since the beginning of the program in 2011. This includes a record $279 million to a single whistleblower last year. But each of these programs remains limited in scope to misconduct falling within each agency's specific jurisdiction.

Aimed at filling gaps in this existing patchwork of whistleblower programs, DOJ will commence with a "90-day sprint" to design and implement its own dedicated whistleblower pilot program, offering monetary incentives for reports across the full range of corporate and financial misconduct that DOJ prosecutes.¹ "Going back to the days of 'Wanted' posters across the Old West, law enforcement has long offered rewards to coax tipsters out of the woodwork," the Deputy Attorney General said. "Now's the time to expand our use of this tool in corporate misconduct cases and apply it to reward whistleblowing."

Contours of DOJ's New Program Take Shape: Guardrails and Areas of Interest

DOJ whistleblowers may qualify to receive a portion of any forfeiture that DOJ imposes as part of a corporate criminal resolution. DAG Monaco announced a number of preliminary guardrails for the new program, with future DOJ whistleblowers eligible for a potential monetary reward only:

After all victims have been properly compensated;
Where they submit truthful information not already known to the government;
If they are not themselves involved in the criminal activity; and
In cases where there isn't an existing financial disclosure incentive—including from qui tam or any federal agency's whistleblower program.

The Deputy Attorney General, taking a moment to address prospective whistleblowers directly, noted that while DOJ will always accept information about violations of any federal law, there are a few topics of particular interest:

Criminal abuses of the US financial system;
Foreign corruption cases outside the jurisdiction of the SEC, including:
- Foreign Corrupt Practices Act violations by non-issuers over which DOJ has jurisdiction (e.g., private "domestic concern" companies that are incorporated or headquartered in the United States or purely foreign companies that take some action in furtherance of a corrupt scheme while in the territory of the United States); and
- Violations of the recently enacted Foreign Extortion Prevention Act, which targets foreign officials on the "demand" side of foreign bribery cases; and
Domestic corruption cases, especially involving illegal corporate payments to US government officials.

Next Steps and Potential Challenges

One day later, speaking at the same event, Nicole M. Argentieri, the acting Assistant Attorney General for DOJ's Criminal Division, provided further details of how the new program is expected to take shape in the coming months, with the Criminal Division—and especially its Money Laundering and Asset Recovery Section—at the forefront. A 90-day "policy sprint" will be used to gather information, consult with stakeholders, and consider more specific requirements for program eligibility and monetary thresholds as DOJ designs the nuts and bolts of the program. The acting Assistant Attorney General confirmed that the program would aim for maximum impact by offering financial incentives to disclose misconduct in areas where no such incentives currently exist and by limiting rewards to cases in which sanctions are above a set monetary threshold as a way of focusing on the most significant matters (where, for example, the SEC and CFTC program thresholds are set at $1 million or more in sanctions).

Although following the highly successful precedents of other agencies, a DOJ-specific program of this kind will also bring its own challenges. For example, DOJ whistleblowers who do choose to identify themselves in hope of receiving a financial reward may not be assured anonymity in any criminal case in the same way as, for example, the SEC program offers. It also remains unclear whether the DOJ will follow the examples of the SEC and CFTC programs in establishing a central Whistleblower Office that can accept anonymous and confidential complaints.

The Deputy Attorney General also emphasized a central aspect of all whistleblower programs: that only those "first in the door," who tell the Department something it doesn't already know, may be eligible for financial rewards. In this context, DOJ's express exclusion of potential defendants from rewards, as persons who may have had some involvement in the criminal activity, is a marked point of difference with the Dodd-Frank and False Claims Act programs, both of which have been very successful at using potential monetary rewards to induce persons to turn in their former associates in misconduct.

DOJ's Continued Focus on Incentivizing Voluntary Disclosures and Corporation

DOJ's newly announced whistleblower reward program closely follows other DOJ initiatives aimed at creating even stronger incentives to report violations promptly and assist with government investigations. This includes recent updates to the Criminal Division's Corporate Enforcement Policy, focusing on enhanced benefits for voluntary disclosure and corporate cooperation, and DAG Monaco's announcement of a Department-wide mandate directing all DOJ components involved in combating corporate crime to promulgate voluntary disclosure policies consistent with examples in the Antitrust, Criminal, and National Security Divisions. US Attorney's Offices in the Southern District of New York and Northern District of California have also very recently announced their own pilot whistleblower programs designed to encourage early and voluntary self-disclosure by individuals regarding certain non-violent offenses.

As the Deputy Attorney General concluded her remarks on the new program: "knock on our door before we knock on yours."

Footnotes

1 The statutory basis for the award program is existing authority to pay awards for information or assistance leading to civil or criminal forfeitures. In particular, 28 U.S.C. § 524 (c)(1)(C) authorizes the Attorney General to pay "awards for information or assistance leading to a civil or criminal forfeiture involving any Federal agency participating in the [Department of Justice Assets Forfeiture Fund]."

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