The Department of Justice’s Criminal Division Launches a Pilot Program on Voluntary Self-Disclosures for Individuals

Since October 2021, the Department of Justice (DOJ) has been implementing a variety of changes to its corporate criminal enforcement policies. These efforts all reflect DOJ’s focus on individual accountability, punishing recidivist misconduct, prioritizing compliance and responsible corporate citizenship, promoting corporate self-disclosure, and incentivizing whistleblowers to come forward. The latest development in these efforts is the Criminal Division’s Pilot Program on Voluntary Self-Disclosures for Individuals that DOJ released on April 15, 2024.

What is the Pilot Program on Voluntary Self-Disclosures for Individuals?

The Pilot Program fills a previously missing piece in the disclosure puzzle by creating an avenue for individual participants in certain types of corporate criminal conduct to self-disclose their conduct while avoiding prosecution. Specifically, if the individual self-discloses the misconduct, fully cooperates with authorities, and pays any applicable victim compensation, restitution, and disgorgement, the Criminal Division will enter into a non-prosecution agreement (NPA) with that individual.

The Criminal Division has explained that the goals of this Program are both to incentivize individuals to report corporate and white-collar criminal misconduct and to incentivize companies to create robust compliance programs that encourage internal reporting of complaints to help prevent, detect, and remediate misconduct.

What are the Criteria for the Pilot Program?

The Pilot Program applies to Criminal Division investigations of enumerated offenses for disclosures made on or after April 15, 2024. The Criminal Division has identified the following requirements for a reporting individual to receive an NPA under the Pilot Program:

1. The reporting individual must disclose original information—e. non-public information that was not previously known to DOJ—and the information must relate to at least one of the following types of violations:
   1. Violations by financial institutions or their insiders or agents related to money laundering, anti-money laundering, registration of money-transmitting businesses, fraud statutes, or fraud against or compliance with financial institution regulators;
   2. Violations by financial institutions, investment advisors, investment funds, public companies, private companies with more than 50 employees, or the insiders or agents of any such entities related to the integrity of financial markets;
   3. Violations related to foreign corruption and bribery by, through, or related to public or private companies;
   4. Violations by public companies or private companies with 50 or more employees that relate to health care fraud or illegal health care kickbacks;
   5. Violations by or through public or private companies with 50 or more employees related to fraud against, or the deception of, the United States in connection with federally funded contracting (excluding health care contracts);
   6. Violations committed by or through public or private companies related to the payment of bribes or kickbacks to domestic public officials.
2. The disclosure must be voluntary, e., made before any sort of request, inquiry, or demand by any enforcement agency; absent any preexisting obligation to report the information; and absent any government investigation or threat of imminent disclosure to the government or the public.
3. The disclosure must be truthful and complete, including the full extent of the individual’s own role in the misconduct.
4. The reporting individual must agree to fully cooperate with DOJ and provide substantial assistance to DOJ’s investigation of related conduct and any prosecution of equally or more culpable individuals or entities.
5. The reporting individual must agree to forfeit or disgorge any profit from the misconduct and pay restitution or victim compensation.
6. The reporting individual cannot have engaged in certain violent, sexually violent, pedophilic, or terrorist conduct; be the CEO, CFO, or hold an equivalent role; be the organizer/leader of the scheme; be a foreign or domestic government official; or have previously been convicted of a felony or any crime involving fraud or dishonesty.

Even outside the parameters of the Pilot Program, however, Criminal Division prosecutors maintain discretion to offer an NPA to individuals in appropriate circumstances, including where individuals self-disclose under the Pilot Program but fail to fully meet the criteria.

Key Takeaways

The implementation of this Pilot Program creates even more pressure to be the “first in the door” to report criminal misconduct. Benefiting from DOJ’s corporate Voluntary Self-Disclosure programs, the whistleblower rewards program, and this Pilot Program all require providing “original information” that is not previously known to DOJ. And this is by design: Deputy Attorney General Lisa Monaco has noted that creating incentives to be the first to report to DOJ through various programs creates a “multiplier effect, encouraging both companies and individuals to tell us what they know as soon as they know it.” Put differently, it helps DOJ “use [its] carrots to wield larger sticks.”

Further, the Pilot Program is geared towards lower-level employees that are not the leader or organizer of the scheme at issue. In other words, the Pilot Program encourages employees who become involved in a scheme but who are not the ring leaders or top company executives to report criminal wrongdoing at their company to avoid prosecution. This is consistent with DOJ’s focus on individual accountability—it is unsurprising that DOJ does not want the Pilot Program to benefit top-level or orchestrating wrongdoers within organizations.

The Criminal Division also noted it will collect anonymized statistical data about disclosures to determine whether to extend, modify, or end the Pilot Program. This tracking indicates there could be even more changes ahead as DOJ continues to develop its policies and programs related to corporate criminal enforcement and self-disclosure.

Finally, the Pilot Program underscores why companies need to be mindful of the expanding avenues and incentives available to whistleblowers and individuals to report wrongdoing both when evaluating their compliance programs and when determining how to address the discovery of potential wrongdoing.