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DOJ dangles more carrots for individual informants with new pilot program
DOJ dangles more carrots for individual informants with new pilot program
29 April 2024
Series
Blogs
29 April 2024
On April 15, 2024, the U.S. Department of Justice announced a new Pilot Program on Voluntary Disclosures for Individuals, which grants fully-cooperating individuals who self-disclose “original information about criminal misconduct” the prospect of a non-prosecution agreement (“NPA”). This pilot program fills a gap left by the agency’s recently announced whistleblower rewards pilot program, the latter of which applies to non-participating informants (refer to our recent article on this program). With this new program, the agency hopes to incentivize participants in a crime to report “criminal conduct that might otherwise go undetected.”
To be eligible to receive an NPA, individual informants must provide “original information,” meaning “non-public information not previously known” to DOJ. The information provided must relate to a qualifying offense. These include money laundering; violations related to the integrity of financial markets; foreign corruption and bribery; domestic bribery; healthcare fraud and illegal kickbacks; and fraud related to federally funded contracting.
The disclosure must be voluntary (i.e., made before a government inquiry or request has been made) and truthful and complete, including with regards to the complete extent of the individual’s own role in the misconduct.
Further, the reporting individual must cooperate fully and provide “substantial assistance” in the investigation and prosecution of an individual or entity that is at least as culpable as the informant. Importantly, DOJ prosecutors retain discretion to determine what qualifies as “substantial.”
Beyond DOJ, the Southern District of New York and the Northern District of California have announced a few very similar initiatives. DOJ’s new pilot program largely mirrors these district-level initiatives, but there are a few key differences in scope, especially in relation to eligible individuals, eligible offenses, and the requirement to provide restitution to victims.
Common to all programs is the requirement for disclosures to be original, voluntary, and truthful and complete, and for informants to offer “substantial assistance,” as described above. All programs provide NPAs as the incentive for reporting individuals and give the agencies the discretion to agree to an NPA even if the specific criteria are not met (though the district-level programs provide more guidance than DOJ’s program on this point).
Key differences between the programs are illustrated in the charts below (which are best viewable on your desktop):
DOJ | |||
| CEOs / CFOs | “the [CEO or CFO] (or equivalent) of a public or private company” | Same as DOJ | Same as DOJ |
| Organizer / leader of scheme | “organizer/leader of the scheme” | N/A | N/A |
| US government officials | “domestic government official at any level, including any employee of a law enforcement agency” | “federal, state, or local elected official or the head of a public agency or entity” or “an official or agent of a federal investigative or federal law enforcement agency” | “federal, state, or local elected or appointed and confirmed official” or “an official or agent of a federal investigative or federal law enforcement agency” |
| Foreign government officials | “elected or appointed foreign government official” | N/A | N/A |
| Involvement in violent offenses / terrorism | “engaged in criminal conduct involving violence, use of force, threats, substantial patient harm, any sex offense involving fraud, force, or coercion, or relating to a minor, or any offense involving terrorism” | “has not engaged in any criminal conduct that involves the use of force or violence; any sex offense involving fraud, force, or coercion, or a minor; any offense involving terrorism or implicating national security or foreign affairs” | “not engaged in any criminal conduct that involves the use of force or violence, any sex offense involving fraud, force, or coercion, or a minor, any offense involving terrorism or implicating national security or foreign affairs” |
| Previous felony convictions | “previous felony conviction or a conviction of any kind for conduct involving fraud or dishonesty” | Same as DOJ | Same as DOJ |
DOJ | |||
| Financial crimes | Crimes “related to integrity of financial markets” | Crimes “affecting market integrity” | Crimes “affecting market integrity” |
| Bribery | Crimes related to “foreign corruption and bribery” | Crimes “involving state or local bribery or fraud relating to federal, state, or local funds” (not FCPA) | Crimes “concerning federal, state or local bribery or fraud relating to federal, state, or local funds” (not FCPA) |
| Fraud | Crimes related to “health care fraud or illegal health care kickbacks” | Crimes “involving fraud” | Crimes “involving fraud” |
| Corporate control failures | N/A | Crimes involving “corporate control failures” | Crimes involving “corporate control failures” |
| IP theft | N/A | “intellectual property theft and related violations” | N/A |
While these policies do introduce greater transparency, which makes the benefits and risks of self-disclosure more predictable, there are some elements that may prevent informants from coming forward. For example, there are certain ambiguities, such as what qualifies as “substantial assistance” and what factors DOJ will consider when exercising its discretion to grant an NPA when the criteria are not technically met. The DOJ policy’s requirement to disgorge profits and compensate victims may also be a hindrance. It will be important to monitor how these policies evolve with time, as the agencies receive feedback from the market and test the effectiveness of the policies in bringing criminal conduct to light.
In any event, given US enforcers’ continued and increasing interest in incentivizing voluntary self-disclosure, businesses should ensure they maintain robust compliance programs and carefully consider the benefits and risks of promptly self-reporting wrongdoings before someone else does so first. It is more important than ever to have internal reporting mechanisms to ensure misconduct can be detected and remediated as soon as possible.