Key Takeaways

At last week’s ABA National White Collar Crime Institute, the leadership of the Department of Justice (the DOJ or the Department), including Attorney General Merrick Garland and Deputy Attorney General Lisa Monaco, made clear that policing corporate misconduct will continue to be a top priority.

• The Department is piloting a “whistleblower monetary rewards program,” under which whistleblowers who meet certain criteria may qualify to receive a portion of forfeitures resulting from DOJ enforcement action.

• The DOJ remains focused on individual accountability and will continue to prosecute high-level executives who profit from corporate malfeasance. Corporations desiring cooperation credit must be willing to identify individual wrongdoers and provide available evidence to the government.

• The DOJ will consider a corporation’s history of compliance or lack thereof when fashioning corporate resolutions; corporate recidivists will face harsher penalties.

• The DOJ’s Criminal Division and U.S. Attorney’s Offices will seek higher sentences against those who deploy AI in white collar, cyber, and national security offenses.

• The DOJ will require corporate compliance policies to include AI risk-management plans and will consider a company’s proactive risk management when fashioning a corporate resolution.

New DOJ Whistleblower Monetary Rewards Pilot Program

On March 7, at the ABA’s White Collar Crime Conference, Deputy Attorney General Lisa Monaco announced a new DOJ-run whistleblower monetary rewards program. The DOJ will launch the pilot program in approximately 90 days and expects to formalize the program in late 2024. Monaco applauded the success of whistleblower programs at the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) but noted that because these agencies cannot “address the full range of corporate and financial misconduct that the Department prosecutes,” their whistleblower programs operate like a “patchwork quilt that doesn’t cover the whole bed.” The DOJ’s program, said Monaco, will successfully fill the gaps in the corporate compliance landscape.

Under the new DOJ program, if an individual reports significant corporate or financial misconduct otherwise unknown to DOJ, that individual could qualify to receive a portion of resulting forfeitures. While the specifics of the program will be finalized over the next few months, Monaco explained that a whistleblower may be eligible to receive funds if:

• All victims have been properly compensated;
• The whistleblower submits truthful information not already known to the government;
• The whistleblower is not involved in the criminal activity itself; and
• The whistleblower does not have an existing financial disclosure incentive to disclose their information — including qui tam or another federal whistleblower programs.

In addition to the above qualifications, Monaco stressed that an eligible whistleblower must be “first in the door” with information not previously known to the DOJ. Acting Assistant Attorney General Nicole Argentieri added that there will be a monetary threshold that focuses DOJ resources “on the most significant cases.”

The DOJ’s Money Laundering and Asset Recovery Section (MLARS) will play a leading role in designing the Department’s new program and will work closely with U.S. Attorneys, the FBI, and other DOJ offices to develop the eligibility requirements for potential whistleblowers.

Knock on Our Door Before We Knock on Yours: Voluntary Self-Disclosure

In addition to announcing the new whistleblower program, DAG Monaco touted the ongoing success of the DOJ’s Voluntary Self-Disclosure Policy, which creates clear, predictable guidelines that encourage companies to take responsibility for misconduct and invest in compliance programs. Monaco emphasized repeatedly that companies on notice of criminal activity should “knock on our door before we knock on yours.”

These statements follow Monaco’s announcement in October 2023 of DOJ’s new safe harbor policy for companies that voluntarily self-disclose criminal misconduct uncovered during pre-acquisition due diligence or integration of a newly acquired entity. At the ABA conference, Monaco clarified that this Policy does not limit the Department’s robust antitrust enforcement efforts, but rather “complements them by ensuring that misconduct doesn’t get swept under the rug.”

The Great Perils and Great Promise of AI

Attorney General Merrick Garland spoke to conference attendees about DOJ’s responsibility to safeguard our nation’s economic institutions and our national security by protecting the nation’s lead in AI technology. Garland highlighted a recent Northern District of California indictment and arrest of a Chinese national charged with theft of AI-related trade secrets. Underscoring this success, DAG Monaco touted the efforts of DOJ’s Disruptive Technology Strike Force, a multi-agency enforcement group working to detect and deter unlawful exports of AI and other sensitive technology.

Monaco then announced that AI-related risks need to be accounted for as part of a company’s compliance program, stating that “going forward and wherever applicable, our prosecutors will assess a company’s ability to manage AI-related risks as part of its overall compliance efforts.” She added that DOJ will update its Evaluation of Corporate Compliance Programs guidance to include provisions that assess “disruptive technology risks – including risks associated with AI.” To that end, the DOJ will also work with public and private entities to identify effective risk management tools through “Justice AI,” an ongoing series of roundtable discussions with stakeholders in industry, academia, law enforcement, and civil society.

Increased Individual Accountability ‘From the Street Corner to the Corner Office’

AG Garland emphasized to attendees the Department’s continued focus on holding individual bad actors responsible for corporate crime. People across the nation, said Garland, need to see there is “not a different set of rules for the rich and powerful” and noted that “if people see that a corporate executive is held to account, is imprisoned for a corporate crime, that people are being treated equally . . . that increases respect for the rule of law.”

DAG Monaco echoed the AG’s sentiments, stating that the DOJ “holds accountable those who break the law, from the street corner to the corner office.” Monaco highlighted recent federal convictions of high-level executives involved in currency exchanges, health care entities, investment firms, and defense contractors.

Corporate Recidivism Leads to More Significant Penalties

DAG Monaco warned that DOJ will continue to consider a company’s criminal, civil, and regulatory history when fashioning an appropriate corporate resolution. If prior enforcement penalties, a Deferred Prosecution Agreement (DPA), or other resolution were insufficient to deter the misconduct, negotiations with the DOJ will begin with an escalated penalty. By way of example, Monaco cited a 2023 corporate guilty plea influenced by the corporation’s breach of a 2019 DPA. She also recalled heightened financial penalties in a 2023 price-fixing investigation where the corporation at issue had already taken advantage of a DPA in 2016. The DOJ will also seek creative remedies tailored to the violation at hand, such as requiring an offending company to sell off an entire product line.

Mergers and Acquisitions Safe Harbor Only Applies to Arm’s Length Transactions

As we previously wrote about in October 2023, Monaco announced a new DOJ Safe Harbor Policy relating to mergers and acquisitions. This policy provides that acquiring companies may avoid DOJ charges if they voluntarily disclose criminal misconduct discovered at an acquired entity to DOJ. In Monaco’s speech at the ABA White Collar Crime conference, she announced that the self-disclosure policy benefits only apply to “bona fide arm’s-length transactions.”

What Does This Mean for Companies and Individuals?

The Department’s initiatives raise several issues that individuals and companies should strongly consider in the context of potential corporate misconduct.

• Under DOJ’s new whistleblower monetary rewards program, individual whistleblowers will have increased incentives to report corporate misconduct quickly and accurately. They may also have a direct financial interest in the outcome of a criminal case. Companies should ensure through testing and other means that their corporate compliance procedures are sufficient to detect and deter potential misconduct. When companies do encounter misconduct, they may avoid or mitigate penalties by being “first in the door” and voluntarily disclosing that conduct before individual whistleblowers.

• Compliance programs matter, and the DOJ continues to strongly encourage companies to design and implement an effective culture of compliance. For DOJ, companies that invest in comprehensive and effective compliance programs put themselves in the best position possible to identify misconduct early and are less likely to face severe penalties if issues arise.

• DOJ has recently displayed a laser focus on AI, its risks and the potential for misconduct relating to its use. Now DOJ expects that AI related risks will be considered in corporate compliance programs. Companies should closely review and revise their corporate compliance programs to address AI risk management. The DOJ will consider a company’s plans to address AI-related risks in assessing its overall compliance efforts. A well-prepared company will have clear, particularized AI policies that adequately address industry-specific risk.

• Companies that are subject to DPAs and other resolutions should devote time and resources to understanding the requirements of their specific obligations. Corporate recidivists will suffer ever-increasing penalties for repeated noncompliance.

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