On March 7, 2024, Deputy Attorney General Lisa Monaco announced the Department of Justice (DOJ) would release a new whistleblower rewards program for civil and criminal forfeitures. On August 1, 2024, DOJ did just that—as the Criminal Division launched its Corporate Whistleblower Awards Pilot Program to uncover and prosecute corporate crime that might otherwise go undetected by the government’s monitoring tools or be difficult to prove.  This new whistleblower rewards pilot program comes on the heels of DOJ’s NPA pilot program and provides a critical 120-day period for both whistleblower and company.

Under this new program, whistleblowers are eligible for an award even if they first report their information internally through established reporting structures, provided the whistleblower also reports the information to DOJ within 120 days.  At the same time, the Criminal Division also amended its Corporate Enforcement and Voluntary Self-Disclosure Policy to establish a presumption that a corporate defendant will receive a declination to prosecute if the company self-discloses within 120 days of receiving an internal whistleblower report.  As a consequence, companies should consult with their external counsel as soon as possible in order to make timely decisions to maintain declination eligibility.

What Do You Need to Know About DOJ’s New Corporate Whistleblower Program

The Corporate Whistleblower Awards Pilot Program is a three-year initiative, effective as of August 1, 2024.  It allows for whistleblowers to be eligible for a share of any forfeiture exceeding $1,000,000 in net proceeds, provided they can provide original, truthful, and complete information relating to one of the following subject areas:  (1) certain crimes involving financial institutions (including AML compliance violations), from traditional banks to cryptocurrency businesses; (2) foreign corruption involving misconduct by companies (including FCPA or money laundering violations); (3) domestic corruption involving misconduct by companies; or (4) healthcare fraud schemes involving private insurance plans.

Information Must Lead to Forfeiture

The information must lead to a successful forfeiture action exceeding $1,000,000 in net proceeds.  A  successful forfeiture occurs when DOJ obtains a final order of forfeiture, civil judgment of forfeiture, or administrative declaration of forfeiture related to assets obtained as a result of an individual’s submission, and those assets are deposited in the Assets Forfeiture Fund.

What Rewards Can a Whistleblower Expect?

All rewards under this pilot program are entirely discretionary, but DOJ notes that the intention of the pilot program is to incentivize individuals with information about corporate criminal wrongdoing to report it.  If a forfeiture is successful, the whistleblower is eligible for up to 30% of the first $100 million in net proceeds, up to 5% of any net proceeds between $100 million and $500 million, and no award on net proceeds over $500 million.  If DOJ determines that an award is appropriate, there is a presumption that the maximum 30% will be awarded up to the first $10 million. 

The policy also states that the whistleblower share will always be paid after owners and lienholders with valid interest in the forfeited property and any individual victims of the scheme receive compensation, but before government entity victims of the scheme are compensated.

Important Takeaways

DOJ expressly described this new pilot program as a gap-filler program, limiting it to specific areas not covered by existing whistleblower programs. While the potential scope of the program initially appears large, DOJ exempts eligibility if another U.S. government or statutory program covers the scheme, meaning SEC, CFTC, FinCEN, and even the AML Act Whistleblower Program will likely trump this pilot program.

Even a whistleblower who does qualify under this pilot program may be in a fraught place in the recovery waterfall. The whistleblower’s award will be taken from the pool of assets remaining after owners and lienholders of the property and individual victims of the scheme are compensated, “to the fullest extent possible,” but before any government agency or corporate entity is compensated. Depending on the scheme alleged and property forfeited, rewards under the program will vary widely.

While DOJ has not overtly said so, the pilot program’s design signals DOJ’s continued focus on incorporating criminal and/or civil forfeiture claims in addition to criminal penalties and other relief in corporate criminal actions.

Despite the narrow focus of this pilot program, it signals DOJ’s continuing march toward leveraging corporate actors to voluntarily disclose all discovered misconduct. Going forward, companies must investigate, consult with counsel, and perhaps make a voluntary self-disclosure— all within 120 days—in order to maintain a presumption of declination.

Conclusion

DOJ is offering whistleblowers a bounty of up to $50 million for successful cooperation.  This substantial financial incentive will increase the likelihood of corporate whistleblowers. 

It is telling that DOJ did not make internal reporting through existing whistleblower channels a condition precedent to participation in the program.  Indeed, it is only a consideration that increases the whistleblowers award—and it is the last consideration listed, after the significance of the information and the assistance of the whistleblower.  Thus, whistleblowers could take their chances and hope the haircut on their award might be worth it if they can guarantee a whistleblower payout by reporting to DOJ first.

However, if a whistleblower does report internally, companies should consult with outside counsel to consider their investigation strategy—especially in light of the declination presumption for reporting within 120 days.  In order to investigate and report to DOJ within 120 days, it will require the company to sprint.  As investigation practitioners and in-house counsel are well aware, for many complex investigations, 120 days would be a difficult timeline to meet.  Companies that invest in a strong compliance program with a dedicated team of internal investigators will be well ahead of those that did not.