On August 1, 2024, the Criminal Division of the Department of Justice (DOJ) launched the Corporate Whistleblower Awards Pilot Program previewed by Deputy Attorney General Lisa Monaco in March of this year. Styled as a three-year “pilot program,” it provides a significant incentive for individuals to report corporate misconduct, including by offering up to 30% of the first $100 million of any net forfeiture to which the reported information leads. It also follows on the heels of several other DOJ initiatives designed to elicit individual disclosures about corporate misconduct, including programs by the DOJ’s Criminal Division and the U.S. Attorneys’ Offices for the Southern District of New York and the Northern District of California, which Alston & Bird previously described here, here, and here.
Program Details
The DOJ’s new whistleblower program offers financial incentives to individuals who report original information to the DOJ that leads to forfeiture of more than $1 million in net proceeds. Among other things, the information must not be public (and not previously known to the DOJ), must “materially add” to whatever information the DOJ already has, and must not be provided by someone who “would be eligible for an award through another U.S. government or statutory whistleblower, qui tam, or similar program” if they had reported to one of those programs. Other key eligibility requirements include that the reporting individual must not be a DOJ official, employee, or contractor; must not be a foreign official; must report the information voluntarily; and must not make any false statements to the DOJ. The reporting individual may have provided the information through a company’s internal reporting mechanisms before reporting to the DOJ, but the reporting individual must report the information to the DOJ within 120 days of having done so in order to be eligible for an award.
The reported information must relate to one of four specific areas: (1) crimes involving financial institutions; (2) foreign corruption involving companies that are not issuers of U.S. securities; (3) domestic public corruption involving companies; and (4) health care fraud involving private insurers.
If these and the other criteria of the DOJ’s new whistleblower program are satisfied, a whistleblower may be eligible for an award of up to 30% of the first $100 million in net proceeds forfeited, and up to 5% of any net proceeds forfeited between $100 and $500 million, with no award available for net proceeds above $500 million, and a presumption in favor of awarding the maximum (30%) amount of the first $10 million in net proceeds forfeited. The DOJ identifies numerous considerations that will guide its determination of how much (if any) award to provide, including the question of whether a reporting individual first reported the information through internal company compliance or other reporting systems. Whistleblowers may only receive an award after individual victims of the criminal conduct are compensated, but may receive an award before victims that are government or corporate entities.
In parallel to the rollout of this new program, the DOJ also announced an amendment to its Corporate Enforcement Policy, which aims to incentivize companies to voluntarily self-report potential misconduct (see previous Alston & Bird analysis of this program, including here). The amendment gives companies that receive an internal whistleblower complaint up to 120 days to report the misconduct to the DOJ and remain eligible for the maximum benefits available under that policy (namely, the presumption that the DOJ will decline to bring a corporate enforcement action against the company). However, the company’s report still must occur before the DOJ contacts the company about the matter.
Key Takeaways
There are many details to this new DOJ whistleblower program, and the complex criteria for eligibility and other aspects of the program may ultimately limit the program’s impact. However, the announcement of this new program highlights certain important considerations for companies:
- The DOJ Remains Focused on Corporate Criminal Enforcement. The Whistleblower Pilot Program offers yet another tool – and “a powerful one at that,” according to Monaco – for the DOJ to pursue corporate criminal wrongdoing and reflects a continued emphasis by the DOJ on this area of enforcement. Companies should not infer from the lower numbers of corporate enforcement actions in recent years that the DOJ has lost interest in robust corporate criminal enforcement.
- Expect More Investigations. The DOJ intends for its whistleblower programs to act together in offering a suite of options for individuals who are aware of corporate misconduct. In announcing this newest program, Monaco noted that these programs “create a multiplier effect that encourages both companies and individuals to tell us what they know – and to tell us as soon as they know it,” and also observed that “any company that hesitates to report voluntarily should remember that we have other tools to uncover that misconduct.” Companies can expect the promise of sizeable financial rewards to lead to more DOJ corporate criminal investigations.
- Expect More Covert Investigations. If indeed the “multiplier effect” desired by the DOJ occurs, and more individuals are incentivized to provide evidence about corporate criminal conduct to the DOJ, companies can have far less certainty that DOJ corporate criminal investigations will be overt in their early stages (e.g., through service of a grand jury subpoena on the company). Rather, the DOJ may more often be able to build robust cases against companies covertly, with the assistance of these incentivized individuals, and companies may only learn of the investigations once the DOJ has gathered substantial evidence and formed a view of the company’s culpability.
- Companies Are on the Clock. While the DOJ has previously emphasized the need for prompt and timely disclosures of potential misconduct by companies, the DOJ has further ratcheted up the pressure for such disclosures by specifying a 120-day time limit for companies to review and respond to internal whistleblower reports. Of course, companies cannot count on having even those 120 days if a whistleblower elects to report to the DOJ well before that time.
- Yet Another Reminder of the Critical Importance of Compliance Investments. In her speech at the rollout of the DOJ’s new policy, Criminal Division leader Nicole Argentieri stated plainly that “now is the time to make the necessary compliance investments to help prevent, detect, and remediate misconduct.” With the DOJ continuing to increase the incentives for individuals to report corporate wrongdoing, it is more important than ever to ensure internal policies and procedures are designed and implemented to maximize the likelihood of not only preventing and detecting misconduct but also of ensuring any reporting of any misconduct occurs internally in the first instance.
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