DOJ Launches the Corporate Whistleblower Awards Pilot Program

On August 1, 2024, the Department of Justice (“DOJ”) launched the Corporate Whistleblower Awards Pilot Program (“Pilot Program”), a three-year initiative managed by the Criminal Division’s Money Laundering and Asset Recovery Section.

This is the culmination of the DOJ’s “policy sprint,” announced back on March 7, 2024 by Deputy Attorney General Lisa Monaco, intended to incentivize companies to invest in a culture of compliance. While announcing the Pilot Program on August 1st, Monaco stated that this Pilot Program is intended to work with DOJ’s corporate voluntary self-disclosure programs to “create a multiplier effect that encourages both companies and individuals to tell [DOJ] what they know – and to tell [DOJ] as soon as they know it.”

Eligibility for Submission

Generally, an individual may be eligible for a whistleblower award if they provide DOJ with original information in writing (pursuant to certain conditions) and that information leads to criminal or civil forfeiture exceeding $1 million in net proceeds forfeited in connection with a successful prosecution, corporate criminal resolution, or civil forfeiture action related to corporate criminal conduct. Regarding the type of conduct that whistleblowers are eligible to report on, Principal Deputy Assistant Attorney general Nicole M. Argentieri explained, “[t]he Pilot Program covers four areas of corporate crime. Each is a priority for Criminal Division prosecutors, and none is covered by an existing whistleblower program”:

1. Foreign corruption and bribery, including violations of the Foreign Corrupt Practices Act, the Foreign Extortion Prevention Act, and violations of money laundering statutes;
2. Crimes involving financial institutions, “the first defense against illicit finance,” including schemes related to money laundering, registration of money transmitting businesses, and fraud with financial institution regulators;
3. Domestic corruption, including bribery of government officials; and
4. Health care fraud involving private insurers.

Moreover, an individual’s submission must be voluntary (i.e., in the absence of a DOJ request, inquiry, or demand), truthful, and complete. Notably, an individual’s submission will not be considered truthful and complete if the individual lies about, conceals, or mischaracterizes their role in the reported misconduct.

Financial Awards

If the whistleblower’s information leads to a forfeiture exceeding $1 million in total net proceeds forfeited in a successful prosecution, corporate criminal resolution, or civil forfeiture action in one of the four areas of corporate enforcement described above, the whistleblower may be eligible for an award. Awards are entirely discretionary and are not guaranteed by DOJ. When considering whether to make a discretionary award, DOJ will consider the following factors:

1. Amount of total assets forfeited: Whistleblower(s) may be eligible for an award of up to 40% of the first $100 million in net proceeds forfeited, up to 5% of any net proceeds forfeited between $100 million and $500 million, and no award on net proceeds forfeited above $500 million. If DOJ determines that an award is appropriate, there is a presumption that the whistleblower will be awarded the maximum 30% of the first $10 million in net proceeds forfeited.
2. Payment Priority: DOJ will draw whistleblower awards from net proceeds of the forfeiture of total assets finally forfeited and deposited in the Assets Forfeiture Fund.
3. Criteria for Determining the Amount of Award: The significance of the information provided by the whistleblower on the success of DOJ’s enforcement, the degree of assistance provided by the whistleblower, and the whistleblower’s participation in an entity’s internal compliance system are all factors DOJ may consider that may increase an award amount to a whistleblower. Conversely, if a whistleblower unreasonably delayed in reporting the criminal violation, interference with internal compliance and reporting systems, or if a whistleblower had a management role/oversight of offices or personnel involved in the misconduct, DOJ may decrease a whistleblower’s award amount. Additionally, an individual is not eligible for payment if they meaningfully participated in the criminal activity; however, if DOJ determines that the whistleblower’s role in the reported schemed was sufficiently limited that the whistleblower could be described as “plainly among the least culpable of those involved in the conduct of a group” (U.S.S.G. § 3B1.2 cmt. n.4, defining “minimal participant”), DOJ will consider the whistleblower’s role in the criminal violations in assessing the amount of award for which they may be eligible.

Whistleblower Protections

DOJ has made clear that any retaliation from an employer against a whistleblower will be taken into account when assessing whether a company cooperated with or obstructed DOJ’s investigation. As a result, DOJ may decline to award cooperation credit to an employer in connection with a corporate resolution or enforcement action due to any such retaliation. Furthermore, DOJ will also consider any action by an entity to impede an individual from directly communicating with DOJ about a possible criminal violation—including enforcing, or threatening to enforce, a confidentiality agreement—when assessing an entity’s cooperation credit, compliance program, and culpability (including for obstruction).

Key Takeaways

While the development of the Pilot Program places renewed focus on corporate compliance programs and potentially increases legal exposure for certain entities, there are a few takeaways that entities should consider.

First, the program will not be open to those who themselves are part of the illegal conduct (in contrast to some programs, like the SEC whistleblower program, which allows awards to those who participated in the misconduct). Additionally, compliance officers and auditors—those whose job it is to remediate problems—are generally not eligible to receive an award through the Pilot Program. This is a major deviation from recent legislation like the Anti Money Laundering Retaliation Act and other regulators’ (e.g., the SEC) handling of whistleblower complaints. However, such compliance officers and auditors will be eligible for an award under the Pilot Program if they make a submission at least 120 days after the information about the misconduct was provided to the relevant entity’s audit committee, chief legal officer, chief compliance officer, or their supervisor. This tight time frame underscores the need for internal compliance programs and processes that are capable of moving as quickly and efficiently as possible.

Second, a whistleblower submission does not contain “original information” if the information is previously known to DOJ. The “first in the door” requirement has been a major feature in DOJ’s recently developed corporate enforcement policies, including both the whistleblower rewards program and DOJ’s Voluntary Self-Disclosure programs. This means that entities with robust compliance and reporting systems will be better positioned to fend off would-be whistleblowers by being the first to report identified misconduct. As Monaco stated, “now is the time to make the necessary compliance investments to help prevent, detect, and remediate misconduct. And when misconduct does occur and companies are considering whether to make a self-report, please remember this simple message: Call us before we call you.”

Third, the Pilot Program’s focus on health care fraud involving private insurers significantly expands the scope of whistleblower risk for health care companies. The False Claims Act qui tam provisions already present risk of whistleblowers in relation to claims submitted to federal health care programs, but health care companies are now also subject to the risk of whistleblowers in relation to claims submitted to commercial payors. Health care companies that work predominately or even exclusively with commercial payors thus have renewed incentive to revisit their internal compliance and reporting systems.

Fourth, given that an entity’s enforcement, or threat of enforcement, of an employee’s confidentiality agreement may adversely impact an entity in relation to the entity’s cooperation credit, compliance program, or culpability for obstruction, now is an appropriate time for employers to review any and all employment policies and agreements (e.g., Codes of Conduct, Employee Handbooks, Non-Disclosure Agreements and Separation Agreements) which contain confidentiality provisions. Specifically, employers should ensure that confidentiality provisions have appropriate carve-outs for whistleblower protections to avoid any appearance of obstructing an individual’s ability to communicate with DOJ regarding potential misconduct. This is especially important in light of the stepped-up enforcement which the SEC has rolled out in this area over the past year, including a record $18 million civil penalty issued in January of 2024 against an entity which used confidentiality provisions in its release agreements.

Finally, on the same day that the Pilot Program was announced, DOJ’s Criminal Division announced a temporary amendment to The Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy (“CEP”) that allows companies who receive a whistleblower’s report internally to qualify for the presumption of a declination when the company: (1) self-reports the conduct to DOJ within 120 days of receiving the whistleblower’s submission, even if the whistleblower reports to the Department before the company does, and (2) meets the other requirements for voluntary self-disclosure and presumption of a declination under the policy. While helpful, 120 days is a very short timeframe for a company to investigate potential misconduct. Accordingly, companies, now more than ever, must be prepared to immediately launch an investigation when faced with a complaint that triggers unlawful conduct like bribery and money laundering. If not, would-be whistleblowers who report internally are incentivized to rush immediately to DOJ, especially if represented by counsel. 

We will continue to monitor the Pilot Program and related developments.