On August 1, 2024, Deputy Attorney General Lisa Monaco announced the launch of DOJ’s Corporate Whistleblower Awards Pilot Program (Pilot Program). The Pilot Program, previewed by Monaco in March 2024, provides another avenue for individuals to disclose allegations of corporate wrongdoing directly to the government.

Key Takeaways

• The Pilot Program seeks to incentivize individuals to report allegations of misconduct to DOJ’s Criminal Division. But individuals must satisfy stringent requirements to qualify for a financial award, including reporting a covered offense, disclosing “original” and “complete” information not previously known to DOJ, and full cooperation.
• DOJ simultaneously announced an amendment to the Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy (the VSD), which now provides a company that voluntarily self-reports to DOJ within 120 days of receiving a whistleblower report eligibility for a presumption of a declination from DOJ, even if the whistleblower already made a report to DOJ, assuming the company satisfies all other voluntary self-disclosure requirements.

• The Pilot Program and amendment to the VSD add to the complex landscape of corporate self-reporting and apply pressure on companies to report allegations of wrongdoing. A company must assess the risk that an employee will use the Pilot Program to report conduct to DOJ before the company is able to complete an investigation or otherwise be in a position to report it to DOJ.

• Companies should evaluate their own whistleblower programs to ensure that those programs are up to date, are well known to employees, and properly incentivize internal reporting. Companies also should ensure that their policies and procedures do not improperly interfere with a whistleblower’s ability to communicate with DOJ.

Pilot Program Background and Key Components

The launch of the Pilot Program follows a 90-day effort by DOJ to operationalize a corporate misconduct whistleblower award program that mirrors other such programs established by the SEC, FinCEN, and CFTC. According to DOJ, the Pilot Program, which will be administered by the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS), is designed to fill perceived gaps between existing whistleblower programs run by other federal agencies.

a. Eligibility

To be eligible for an award under the Pilot Program, the information a whistleblower provides must result in a successful civil or criminal forfeiture exceeding $1 million and involve misconduct related to one of four areas: (1) financial institutions, (2) foreign corruption, (3) domestic corruption involving bribes or kickbacks to government officials, or (4) health care fraud involving private insurance plans.

In addition to these subject matter requirements, there are several other significant limitations on eligibility for a financial award under the Pilot Program. In particular, a “voluntary” disclosure must be made before any government inquiry into the matter by an individual who has no preexisting obligation to disclose the information. Disclosure must be made in the absence of any government investigation or threat of imminent disclosure to the government or the public of the alleged misconduct.

The disclosure must also be “truthful and complete,” meaning an individual must disclose all information known to the individual related to any misconduct in which the individual participated or of which the individual is aware, including the individual’s own role in the misconduct.

The Pilot Program further requires that the individual “fully cooperate” with DOJ in its investigation, including by providing truthful and complete testimony and evidence, and if asked, cooperating proactively with law enforcement.

An individual may be eligible for an award from DOJ even if the individual first reports the information to his or her employer so long as the whistleblower makes the report to DOJ within 120 days of reporting the same to the individual’s employer.

b. Award Payments

Award amounts are calculated based on the net proceeds successfully civilly or criminally forfeited. Whistleblowers are 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 million and $500 million. There is no additional award on net proceeds forfeited in excess of $500 million.

The award amount is in the sole discretion of DOJ. According to DOJ, however, the presumption is that DOJ will award the maximum amount when appropriate. This presumption can be rebutted, and the award amount decreased, if the whistleblower was culpable in the reported conduct, unreasonably delayed reporting the criminal violations, interfered with DOJ’s investigation, or served in a management role of any culpable individual or office.

c. Amendments to Voluntary Self Disclosure Policy

At the same time, DOJ announced that its VSD had been amended so that if a whistleblower made both an internal report to a company and a whistleblower submission to DOJ, the company may still qualify for a presumption of a declination. In such a circumstance, the presumption will only apply if the company disclosed the allegations to DOJ within 120 days of receiving the internal whistleblower report and meets the other requirements for the presumption of a declination outlined in the VSD.

Conclusion

The Pilot Program adds another way for individuals to self-report allegations of misconduct directly to DOJ. As with other federal whistleblower programs, DOJ has set a high bar for individuals to qualify for a potential financial award. Companies should continue to examine their own whistleblower programs to ensure these programs encourage internal reporting in the first instance without interfering with an individual’s right to report to DOJ.

[View source.]