Money Talks: DOJ Announces Whistleblower Reward Program

A new policy announced by the U.S. Department of Justice (DOJ) makes it even more critical for companies to analyze and assess corporate wrongdoing quickly, or risk missing out on potential leniency from self-reporting to the U.S. Government.

On March 7, 2024, Deputy Attorney General Lisa Monaco announced  that the DOJ is launching a pilot whistleblower reward program that is intended to incentivize individuals to report corporate misconduct to the U.S. Government. While speaking at the American Bar Association’s 39^th National Institute on White Collar Crime, DAG Monaco stated that if an individual helps the DOJ discover significant corporate or financial misconduct, which was otherwise unknown to the DOJ, then the individual could qualify to receive a portion of the resulting forfeiture. The DOJ plans to announce the details of the program in about 90 days and to officially begin the program in 2024.

DAG Monaco highlighted that under its new corporate enforcement regime, the DOJ is:

• Holding individuals accountable for corporate misconduct.
• Demanding stiffer penalties for corporate recidivists.
• Using a mix of carrots and sticks to promote responsible corporate citizenship.
• Evolving to meet new and emergency threats, including disruptive technology.

To that end, this new DOJ whistleblower reward program, coupled with DOJ’s revamped corporate enforcement and voluntary self-disclosure policies  from last year, further encourages and emphasizes early cooperation with the U.S. Government and self-reporting of corporate criminal misconduct from companies in return for leniency—or risk missing out on the DOJ’s carrot.

DOJ 2023 Policy Revisions

The whistleblower reward program is the latest in a string of revisions to the DOJ policies on corporate criminal enforcement.¹ In February and March 2023, the DOJ rolled out a series of revisions to its Corporate Enforcement and Voluntary Self-Disclosure Policy designed to broaden the pool of companies that would be eligible for cooperation credit in order to incentivize additional companies to cooperate with DOJ investigations.

The DOJ announced it would significantly reduce fines for companies depending on their (1) voluntary self-disclosure, (2) cooperation, and (3) remediation of the corporate misconduct. As under prior guidance, the DOJ could also decline to seek a guilty plea. Under the revised policies, companies with prior criminal resolutions and other aggravating factors could still be afforded leniency, depending on their disclosure and degree of cooperation and remediation.

In March 2023, the DOJ also announced the Compensation Incentives and Clawbacks Program, in which a company cooperating with a DOJ investigation could receive an additional fine reduction, if the company had implemented a program to recoup, or clawback, compensation from culpable employees.

DOJ Whistleblower Reward Program

Understanding that money talks, DAG Monaco likened the whistleblower reward program to the days of “Wanted” posters in the Old West, offering rewards to help law enforcement uncover criminal activity. And while DAG Monaco pointed to the successes of other federal agency whistleblower award programs, she also identified their limitations in only covering misconduct within their agencies’ jurisdictions.

With this newly announced program, the DOJ seeks to fill those gaps.

The DOJ is currently authorized to pay monetary awards to individuals who provide information or assistance leading to civil or criminal forfeitures, but the DOJ has never had an official program to award whistleblowers.

By implementing this program, the DOJ is hoping to receive reports regarding:

• Criminal abuses in the U.S. financial system.
• Foreign corruption cases, including Foreign Corrupt Practices Act (FCPA) violations by non-issuers and violations of the recently enacted Foreign Extortion Prevention Act.
• Domestic corruption cases, especially those involving illegal corporate payments to government officials.

The particulars of the program have not yet been disclosed, but DAG Monaco indicated that the DOJ will offer payments only:

• After all victims have been properly compensated.
• To those who submit truthful information not already known to the U.S. Government.
• To those not involved in the criminal activity itself.
• In cases where there is not an existing financial disclosure incentive—including qui tam or another federal whistleblower program.

Further requirements for program eligibility include providing original, non-public, truthful information not already known to the DOJ, and only when that information is provided voluntarily and not in response to any U.S. Government inquiry, preexisting reporting obligation, or imminent threat of disclosure. The DOJ also expects to establish a monetary threshold for rewards.

Critically, the new pilot program, when coupled with the Voluntary Self-Disclosure policy announced last year, may create a race to bring information to the DOJ’s doorstep. Both the Corporate Voluntary Disclosure Program (which provides leniency to companies) and the newly-announced whistleblower incentive program, require that the company or individual provide information that the DOJ does not already know in order to receive the benefit. The DOJ is hopeful this dynamic will breed a multiplier effect that encourages both companies and individuals to self-report corporate criminal misconduct as soon as it is discovered.

USAO Whistleblower Pilot Programs

The DOJ’s whistleblower reward program is not the first of its type. As DAG Monaco noted in her speech, both the U.S. Attorney’s Offices for the Southern District of New York (SDNY) and the Northern District of California (NDCA) have recently piloted programs that encourage voluntary disclosure by individuals.

In February 2023, the SDNY announced the launch of its Whistleblower Pilot Program, a policy that provides a path for individuals to receive non-prosecution agreements if they voluntarily disclose and cooperate against others involved in certain criminal conduct, such as corporate control failures, state and local bribery, and theft of government funds. Notably, the policy does not apply to information regarding violations of the FCPA, campaign finance laws, federal patronage crimes, corruption of the electoral process, or bribery of federal officials. Nor do the policy’s benefits extend to CEOs or CFOs of a company, a public official, a federal agent, or a person of “major public interest.”

While cooperation agreements between individual defendants and prosecutors are not uncommon in the SDNY, this policy is intended to increase self-disclosure of corporate misconduct by allowing individuals to avoid prosecution entirely.

Meanwhile, the NDCA recently announced it too would soon establish its own version of the SDNY Whistleblower Pilot Program, which will have a greater focus on intellectual property matters.

A key difference between these USAO whistleblower programs and the DOJ’s whistleblower program is that people who played a role in the crime will not be eligible for monetary compensation under DOJ’s program.

Key Takeaways

The whistleblower rewards program initiative is the latest DOJ policy shift designed to entice more self-reporting of corporate wrongdoing. As we recently noted, the rollout of these policies can have major benefits for companies that participate. In January of this year, for example, the software company SAP was able to receive a deferred prosecution agreement, despite its record of recent corporate wrongdoing, as a result of its substantial cooperation with investigators and timely remediation of wrongdoing.

To this point, the DOJ’s focus had been on encouraging corporations to hand over evidence of internal corporate misconduct. This new effort, on the other hand, targets individual employees who learn about their company’s corporate crimes. The specifics of the whistleblower rewards program will be critical for companies to analyze when developing or revising internal corporate compliance policies and assessing factors before self-disclosing.

If the new policy succeeds in increasing whistleblower disclosures to law enforcement by individual employees, companies will have to act even more swiftly in analyzing and evaluating whether to self-disclose in an effort to obtain the benefits of making a voluntary self-disclosure under the Voluntarily Self-Disclosure policy. Once an employee brings misconduct to the attention of prosecutors, a company will no longer receive the full range of benefits it would have had it been the first in the DOJ’s door with the information. While speed is always important when a company investigates its own misconduct, the interplay of the new and existing DOJ programs may turn such investigations into a sprint.

Companies should continue to devote significant resources to maintaining a robust compliance program and should consider the factors that the DOJ has emphasized: voluntary self-disclosure, complete cooperation, and swift remedial measures. Buchanan’s team of white-crime and government investigations attorneys is available to guide companies through this evolving DOJ corporate enforcement era.