The Olympians in Paris are not the only ones sprinting across the finish line. In March 2024, Lisa Monaco, Deputy Attorney General of the U.S. Department of Justice (“DOJ”), announced that DOJ would be conducting a “90-day sprint” to implement a new DOJ-run whistleblower rewards pilot program. On August 1, 2024, Monaco announced that this program was officially live. Now, whistleblowers can visit justice.gov/CorporateWhistleblower to report information about certain types of corporate crime with the prospect of a reward.
As we explained previously (see here), whistleblower rewards programs – especially of this breadth – are rare globally, and these financial incentives will likely enable the US to hold onto its leadership position vis-à-vis its global peers in the fight against corporate misconduct. Now is the time for companies to invest in and improve their compliance programs, as DOJ is “doubling down on a proven strategy to ferret out criminal activity that might otherwise go unreported.”
The program focuses on foreign and domestic corruption, crimes involving financial institutions, and health care fraud involving private insurers
The purpose of the new program is to fill gaps in the current patchwork of whistleblower rewards programs in the US. To that end, DOJ’s new program focuses on the following areas of corporate crime, each of which is a priority for DOJ and none of which is specifically covered by existing whistleblower programs:
- Foreign & Domestic Corruption: DOJ is targeting foreign corruption cases that fall outside of the Securities and Exchange Commission’s purview, as well as offences under the new Foreign Extortion Prevention Act, which DOJ intends to “vigorously enforce.” DOJ also plans to expand enforcement targeting domestic corruption.
- Crimes involving Financial Institutions: DOJ is focused on cases involving the obstruction or defrauding of financial regulators, including those featuring cryptocurrencies or efforts to access services from U.S. financial institutions by means of fraud.
- Healthcare Fraud Involving Private Insurers: To fill the gap left by the Civil Division’s qui tam program, which targets fraud on federal healthcare benefit programs, DOJ is targeting fraud involving private insurers with this program, citing estimates of tens of billions of dollars in such fraud each year.
Rewards are “entirely discretionary and an award is not guaranteed”
Along with its announcements, DOJ published guidance and FAQs detailing the mechanics of the program. Key highlights from these materials include:
- Rewards are discretionary: Upon receipt of a whistleblower submission, DOJ’s Criminal Division will consult with the US Federal Bureau of Investigation on whether to open an investigation. If a resulting investigation and prosecution lead to a forfeiture greater than $1 million, the whistleblower may—in DOJ’s sole discretion—be eligible for a monetary reward. Rewards are neither appealable nor subject to judicial review.
- Certain information may not qualify for an award: To be eligible for an award, an individual must provide, in writing, “original information,” which must be non-public, not previously known to DOJ, and “materially add” to the information DOJ already has. DOJ guidance makes clear that information will not be considered “original” if, among other reasons, it was obtained through privileged communications, obtained in connection with the legal representation of a client, obtained second hand through the media, a judicial or administrative hearing, government report, or an audit, or if the information was obtained by an employee in a compliance or internal audit function.
- Rewards are based on a percentage of “net proceeds forfeited”: Potential awards will be calculated based on the value of any assets DOJ obtains after compensating eligible individual victims and paying other costs associated with the forfeiture. Whistleblowers may be eligible to receive up to 30% of the first $100 million in net proceeds forfeited and up to 5% of net proceeds forfeited between $100-$500 million. The precise percentage will vary depending on factors such as the usefulness of the whistleblower’s information and level of assistance provided.
- Culpability and other factors can bar or decrease an award: Individuals who meaningfully participate in the misconduct being reported are barred from receiving an award. (But note: DOJ’s Pilot Program on Voluntary Disclosures provides non-monetary incentives for participating informants who meet program requirements.) Lesser degrees of culpability, unreasonable delay, interference with internal reporting systems, and the whistleblower’s role in overseeing the misconduct are other factors that could result in the reduction of an award.
- Anonymous reports are permissible, but only through attorneys: Whistleblower reports made through attorneys are allowed to be anonymous. If made by an individual, contact information is required to allow DOJ to verify the whistleblower’s identity.
New time limits applicable in DOJ’s Corporate Enforcement and Voluntary Self-Disclosure Policy
In parallel, Nicole M. Argentieri, DOJ’s Principal Deputy Assistant Attorney General, announced an amendment to DOJ’s Corporate Enforcement and Voluntary Self-Disclosure Policy. Under this amendment, companies that receive an internal tip from a whistleblower can benefit from the “greatest benefit” under the policy—a presumption of declination—if they come forward and report the misconduct within 120 days, provided DOJ has not already contacted the company.
Key Takeaways
In the words of Argentieri: DOJ is “using more tools than ever before to identify corporate misconduct, so now is the time to make the necessary compliance investments to help prevent, detect, and remediate misconduct.”
In this environment, companies should ensure their corporate compliance programs are robust, capable of preventing misconduct before it happens, and aligned with DOJ requirements. Companies should also be taking proactive efforts to quickly detect corporate misconduct when and if it occurs, to ensure they are well placed to make a voluntary disclosure as needed.