U.S. Deputy Attorney General Lisa Monaco announced the creation of a new U.S. Department of Justice (DOJ or Department) Whistleblower Rewards Program at the 39th Annual ABA White Collar National Institute in San Francisco March 6-8, 2024. Seeking to fill gaps in the "patchwork quilt" of other federal whistleblower programs, DOJ's hope is that the new program will address the "full range of corporate and financial misconduct that the Department prosecutes."

According to Monaco, DOJ will engage in a 90-day "policy sprint" to develop and implement a whistleblower pilot program, which will have a formal start date later in 2024. Monaco stated that the program will be available to individuals who are first to report alleged wrongdoing that was not previously known to the Department and that DOJ is most interested in information that would allow the Department to identify wrongdoing by individuals who seek to harm the nation's financial system or engage in foreign corruption. To incentivize whistleblowing, DOJ will offer a whistleblower a share of funds the government collects as a result of the information provided.

The new program has some important limits. First, an individual involved in the alleged wrongdoing may not recover rewards under the new whistleblower program. Second, recovery will not be available if another whistleblower incentive is available (for example, by filing a case under the False Claims Act). And third, whistleblowers will not receive any funds until "all victims have been properly compensated."

Speaking at the same conference, U.S. Assistant Attorney General Nicole Argentieri stated that the program will be spearheaded by DOJ's Money Laundering and Asset Recovery Section (MLARS) and explained that the whistleblower rewards are authorized under Title 28 of the United States Code, which authorizes payments for "information or assistance leading to civil or criminal forfeitures." Noting that DOJ has previously used this authority "here and there," Argentieri stated it has never been used "as part of a targeted program."

According to Argentieri, MLARS will play a leading role in designing the pilot program and work with U.S. Attorney's Offices, the FBI and other parts of DOJ to develop guidelines addressing eligibility for potential whistleblowers, including monetary thresholds. Argentieri reiterated that though the program is still being developed, the Department will, at the very least, require whistleblowers to provide information that is 1) original, 2) nonpublic, 3) truthful, 4) not already known to the department and 5) provided voluntarily (i.e., not in response to a government inquiry, preexisting obligation, or imminent threat of disclosure).¹

The government hopes that its nationwide program offering financial rewards will lead to the development of more significant cases and add to DOJ's already robust arsenal of "carrots and sticks." Indeed, Monaco reminded conference attendees that the Department is interested not just in "simply bringing cases," but also in "building an enforcement framework that promotes good corporate citizenship."

Takeaways

By creating this program, there is a new, potentially enormous financial upside for whistleblowers to step forward and report corporate malfeasance and ethical lapses to DOJ. With would-be whistleblowers more incentivized than ever, corporate organizations and their counsel should evaluate their compliance programs to ensure that they have put themselves in the best position possible to identify and address any alleged wrongdoing.

Notes

¹ The proposal of financial rewards in the DOJ whistleblower program differs from the incentives offered by at least one U.S. Attorney's Office, the Southern District of New York (SDNY), in its whistleblower program announced earlier this year. (See Holland & Knight's previous alert, "'Call Us Before We Call You': SDNY Announces Pilot Whistleblower Program," Jan. 19, 2024.) While similarly seeking to boost prosecutions of substantial financial fraud, the SDNY's program, in contrast to DOJ's newly announced program, is aimed at alleged wrongdoers and seeks to incentivize those individuals to come forward voluntarily, self-report their own misdeeds, truthfully provide information about investment and financial fraud, and cooperate fully to qualify for a non-prosecution cooperation agreement.