[co-author: Rebecca Watson]
On March 7, 2024, U.S. Deputy Attorney General Lisa Monaco gave remarks at the American Bar Association’s 39th National Institute on White Collar Crime in San Francisco, California. Monaco provided updates on the U.S. Department of Justice’s (DOJ or the Department) corporate criminal enforcement efforts and announced a handful of new Department initiatives, including a new DOJ whistleblower program that gives monetary rewards for whistleblowers in cases that lead to criminal or civil forfeiture.
As described below, Monaco provided key insights into the Department’s recent efforts and new developments in its enforcement strategy.
DOJ continues to prioritize individual accountability and punishing repeat offenders.
Monaco confirmed that the Department’s top priority remains holding individuals accountable, regardless of their seniority or position within a company. As evidence of DOJ’s commitment to this goal, Monaco pointed to the recent convictions of the CEOs of the world’s two largest cryptocurrency platforms, as well as other prosecutions of senior executives in the past few years.
Monaco also emphasized the importance of holding corporate recidivists accountable and imposing significant penalties to deter companies from viewing criminal resolutions as simply a “cost of doing business.” She pointed to several recent examples of the Department imposing additional penalties on companies that violated their deferred prosecution agreements or continued to engage in corporate misconduct following a previous resolution as evidence of DOJ’s focus on penalizing repeat corporate offenders.
DOJ is focused on bolstering its reporting programs, including a new whistleblower program.
Monaco next discussed the importance of using “carrots” in addition to “sticks” to incentivize companies to invest in compliance and prevent misconduct. Among other measures, Monaco referenced the Department’s Voluntary Self Disclosure policy, which rewards companies that voluntarily report a violation before the DOJ discovers it. She noted that while cooperation with a DOJ investigation will also help a company reduce its exposure, “no matter how good a company’s cooperation, a resolution will always be more favorable with voluntary self-disclosure.” She also highlighted the Department’s clawback policy, through which the Criminal Division provides dollar-for-dollar credit to companies that claw back or withhold compensation from culpable employees, to ensure that individuals at the company are punished for and deterred from wrongdoing.
In addition to encouraging companies to self-report, Monaco explained that the Department is also looking to expand these incentives for individuals to report potential corporate misconduct to the government. She noted the Department has already put in place two pilot programs at the U.S. Attorney’s Offices in the Southern District of New York and the Northern District of California that offer non-prosecution agreements for certain categories of at-fault individuals who self-disclose wrongdoing and cooperate against other, more culpable targets. Monaco said that the Department plans to evaluate the results of those pilot programs later this year and determine whether to expand them.
Most notably, however, Monaco announced that—following a 90-day “policy sprint” to gather additional information—the Department will implement a new whistleblower program to encourage individuals to report corporate misconduct. Though many “indispensable” whistleblower programs already exist at other government agencies and departments — including at the U.S. Securities and Exchange Commission (SEC), Commodity Futures Trading Commission, IRS and FinCEN — Monaco explained they are only “a patchwork quilt that doesn’t cover the whole bed” of corporate and financial misconduct. To that end, Monaco noted that DOJ will adopt its own whistleblower program to reward nonculpable individuals who help DOJ discover significant corporate or financial misconduct that leads to a civil or criminal forfeiture. Whistleblowers will be eligible to receive a portion of that forfeiture.
While the program is still in development and will not formally start until later this year, Monaco provided some additional detail on its basic parameters. First, whistleblowers will not receive payments until after all victims have been properly compensated. Second, individuals can qualify only if they submit truthful information that is not already known to the government. Third, the program will apply only to individuals who are not involved in the criminal activity themselves. Fourth, the program will apply only in cases where there is not an existing financial disclosure incentive, such as a qui tam action or other federal whistleblower program.
Monaco added that the Department is particularly interested in receiving information regarding criminal abuses of the U.S. financial system, foreign corruption cases outside the jurisdiction of the SEC — including Foreign Corrupt Practices Act (FCPA) violations by non-issuers and violations of the recently enacted Foreign Extortion Prevention Act — and domestic corruption cases, especially involving illegal corporate payments to government officials.
Monaco emphasized that the key guideline for all reporting of wrongdoing is to be first, explaining, “[w]hen everyone needs to be first in the door, no one wants to be second,” and therefore companies and individuals are incentivized to tell the Department what they know as soon as they know it, which bolsters the Department’s enforcement capabilities.
Monaco concluded the discussion by noting that “our message to whistleblowers is clear: the Department of Justice wants to hear from you. And to those considering a voluntary self-disclosure, our message is equally clear: knock on our door before we knock on yours.”
McGuireWoods Insights
The new DOJ whistleblower program will provide an additional tool for DOJ to encourage fast disclosure of potential corporate wrongdoing to the government. Its adoption is especially notable for privately held companies, as well as those not listed in the United States, whose employees may now have an avenue to receive financial rewards similar to those available to individuals reporting through the SEC’s successful whistleblower program. Follow-on comments made on March 8, 2024, by Nicole Argentieri, the acting Assistant Attorney General for DOJ’s Criminal Division, suggest the Department is interested in driving reporting on such entities. In describing the program, she noted DOJ “anticipate[s]… [that it] could prove especially useful in developing foreign corruption cases that are outside the jurisdiction of the SEC, including FCPA violations by non-issuers.”
Argentieri reported that DOJ’s Money Laundering and Asset Recovery Section will play a key role in developing the whistleblower guidelines over the next several months. McGuireWoods will continue to monitor and report on the program as it is finalized and implemented.
