Quick Hits

• DOJ Deputy AG Monaco announced the department will launch a pilot program to make whistleblowers who voluntarily provide truthful information not already known by the DOJ eligible to share in any resulting monetary forfeiture.
• The program will only apply to whistleblowers who are ineligible for financial incentives under another federal whistleblower program or in a qui tam action.
• The program is expected to launch before the end of 2024.

The DOJ is taking the next ninety days to develop and implement a new pilot program that will provide additional monetary awards to whistleblowers, Monaco announced during her keynote remarks at the American Bar Association’s 39th National Institute on White Collar Crime.

Under the program, individuals who provide information to the DOJ on “significant corporate or financial misconduct” not otherwise known by the DOJ will be eligible to receive a portion of any resulting civil or criminal forfeiture, Monaco said, according her prepared remarks, released by the DOJ. The pilot program is expected to launch later in 2024.

“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,” Monaco said. “And today, we’re announcing a program to update how DOJ uses monetary rewards to strengthen our corporate enforcement efforts.”

New DOJ Whistleblower Rewards Program

Under the new DOJ-run whistleblower rewards program, individuals who provide information to the DOJ on “significant corporate or financial misconduct” that the DOJ does not otherwise know about could qualify to receive a portion of any resulting forfeiture obtained. Whistleblowers will only be eligible to receive financial payments:

• after all victims have been compensated,
• if they provide “truthful information not already known to the government,”
• if they were not involved in the criminal activity, and
• if they do not qualify for another whistleblower program or qui tam recovery

Current law authorizes the U.S. attorney general to pay awards for information that helps lead to civil or criminal forfeiture. Monaco said that the DOJ has used this authority in the past “but never as part of a targeted program.”

The program builds off of other federal whistleblower programs that provide financial incentives, including qui tam actions, alleged Foreign Corrupt Practices Act (FCPA) violations, and similar programs at the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), the Internal Revenue Service (IRS), and the Financial Crimes Enforcement Network (FinCEN).

Under the “Securities Whistleblower Incentives and Protection” program in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Section 21F of the Exchange Act), the SEC has awarded more than $1 billion to whistleblowers since 2012, including record awards of $279 million in May 2023.

While qui tam actions only apply to fraud against the government, and while the other federal whistleblower programs apply to misconduct within those agencies’ jurisdictions, Monaco said that the new DOJ program is meant to fill in the gaps to provide financial incentives for whistleblowers regarding corporate and financial misconduct that the DOJ prosecutes and which is not covered by the existing whistleblower programs.

Monaco said that the DOJ is particularly interested in information on “[c]riminal abuses of the U.S. financial system,” “[f]oreign corruption cases outside the jurisdiction of the SEC, including FCPA violations by non-issuers and violations of the recently enacted Foreign Extortion Prevention Act,” and “[d]omestic corruption cases, especially involving illegal corporate payments to government officials.”

DOJ Whistleblower Policy Changes

Monaco also announced that the DOJ has codified its “Mergers & Acquisitions Safe Harbor Policy,” announced in October 2023, in the DOJ’s Justice Manual. That policy is meant to incentivize acquiring companies to voluntarily self-disclose criminal misconduct at a company being acquired that is discovered during the due diligence process, by offering the acquirer a presumption of declination to prosecute to avoid successor liability. Monaco said that the policy was codified with “the key provision that it only applies to bona fide, arms-length transactions.”

Both the M&A Safe Harbor Policy and the newly announced financial incentives pilot program come amid the DOJ’s ongoing effort to broaden its Corporate Voluntary Self-Disclosure (VSD) Policy with the goal of incentivizing companies and individuals to voluntarily come forward with evidence of misconduct on their own and before the DOJ discovers it.

“With these announcements, our message to whistleblowers is clear: the Department of Justice wants to hear from you,” Monaco said in her remarks. “And to those considering a voluntary self-disclosure, our message is equally clear: knock on our door before we knock on yours.”

Next Steps

The DOJ under the Biden administration has made corporate compliance a priority and has focused on increasing voluntary self-disclosure and holding alleged individual wrongdoers accountable. These priorities put the onus on employers, company executives, and company compliance officers to ensure they have “state of the art” compliance policies, programs, procedures, along with whistleblower protections and investigations procedures, that are designed to encourage the prompt discovery and reporting of potential misconduct.