On August 1, 2024, the Department of Justice officially launched a three-year pilot program to reward whistleblowers who report corporate misconduct.¹  Deputy Attorney General (DAG) Lisa Monaco previewed this whistleblower program in March 2024 at the American Bar Association’s 39th National Institute on White Collar Crime in San Francisco, explaining that DOJ would use its existing authority to pay awards for information or assistance leading to civil or criminal forfeitures to reward whistleblowing.² On August 1, DOJ presented the details of a three-year pilot program, the “Corporate Whistleblower Awards Pilot Program,” that will compensate whistleblowers providing original and truthful information to DOJ’s Criminal Division relating to certain crimes, if that information is not already covered by other agencies’ whistleblower programs and leads to a successful forfeiture.³

The DOJ’s August 1 Guidance   lauds the success of existing federal whistleblower programs at the SEC, CFTC and FinCEN  , but notes that “other agencies’ whistleblower programs do not cover the full scope of corporate crime the Department investigates and prosecutes, leaving gaps that the Department now seeks to fill.”⁴   In a call with reporters on August 1, DAG   Monaco noted that the role of the DOJ Whistleblower Pilot Program   is to fill in those gaps, while also “benefit[ing] … companies that invest in effective compliance programs.”⁵

In connection with the announcement of the Whistleblower Pilot Program, DOJ also temporarily amended the Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy so that a company that receives an internal report of misconduct from a whistleblower who also makes a submission to DOJ must self-report that misconduct to DOJ within 120 days after receiving the whistleblower allegation if the company wishes to be eligible for a presumption of a declination under the Corporate Enforcement Policy.⁶

The DOJ Whistleblower Pilot Program is effective as of August 1, 2024.

Eligibility Criteria Under the DOJ Whistleblower Pilot Program

Original Information. To qualify for an award under the Whistleblower Pilot Program, an eligible whistleblower⁷ must provide in writing “original” information to DOJ, defined as information derived from their independent knowledge or independent analysis, that is nonpublic, was not previously known to DOJ and materially adds to the information DOJ already possesses. 

If the whistleblower first reported information through the company’s internal whistleblower channels, the whistleblower must also report the information to DOJ within 120 days of that internal reporting for the information to be considered “original” under the Whistleblower Pilot Program.⁸

Information will not be considered original if the whistleblower learned of misconduct because of their position at the company, such as through their service as an officer, director, trustee or partner, or in a role whose principal duties involve compliance or audit functions. 

Subject Matters. The information provided by the whistleblower under the Whistleblower Pilot Program must pertain to one of four areas of corporate crime: 

1. Violations by financial institutions, their insiders or agents (including schemes involving money laundering, anti-money laundering compliance violations, registration of money transmitting businesses or fraud) and fraud against or noncompliance with financial institution regulators. 
2. Violations related to foreign corruption and bribery by, through or related to companies (including violations of the Foreign Corrupt Practices Act, the Foreign Extortion Prevention Act and the money laundering statutes). 
3. Violations committed by or through companies related to the payment of bribes or kickbacks to domestic public officials (including federal, state, territorial or local elected or appointed officials, and officers or employees of any government department or agency). 
4. Violations related to (a) federal healthcare offenses and related crimes involving private or other nonpublic healthcare benefit programs, where the overwhelming majority of claims are submitted to private or other nonpublic healthcare benefit programs, (b) fraud against patients, investors and other nongovernmental entities in the healthcare industry, where the overwhelming majority of the actual or intended loss was to patients, investors and other non-governmental entities, or (c) any other federal violations involving conduct related to healthcare not covered by the Federal False Claims Act. 

These areas are similar to those announced for the Pilot Program on Voluntary Self-Disclosures for Individuals, as we previously reported. 

Voluntary. An individual’s decision to report activity to DOJ must be voluntary. This means it must occur (1) before DOJ requests information that relates to the subject matter of the report from that individual or anyone representing them, (2) when the individual does not have an obligation to report the information either to DOJ or any to other agency, and (3) in the absence of a government investigation or imminent threat that the information will be disclosed to the government or the public. 

Truthful and Complete. An individual must provide truthful and complete information. They must disclose all information they have related to any misconduct, including their own role in such misconduct. 

Cooperation. Once an individual has made a report, they must cooperate with DOJ in its investigation. This includes but is not limited to providing truthful and complete testimony and evidence, whether in interviews, before a grand jury, or at any trial or other court proceeding; producing documents, records and other evidence when called upon by DOJ; and could include working in a proactive manner.

Leading to Forfeiture. The information must lead to a forfeiture of over $1 million in proceeds in connection with a prosecution, corporate criminal resolution or civil forfeiture action. To determine whether the information provided by the individual led to a successful forfeiture, DOJ will consider the following factors: (1) whether the information was sufficiently specific, credible and timely for DOJ to pursue an investigation, (2) if the matter was already under investigation, whether the information significantly contributed to the successful forfeiture, and (3) whether the whistleblower first made an internal report that led the entity to provide information to DOJ that satisfies the first two requirements. 

The whistleblower is only eligible for an award that comes out of a portion of criminal or civil forfeiture— not any portion of a criminal penalty—and only after all victims have been compensated. In cases resulting in criminal penalty but no forfeiture, the whistleblower cannot collect an award for a tip that uncovers significant wrongdoing. And in other cases, that may set up a tension between DOJ’s desire to reward whistleblowers and its desire to reimburse victims from forfeited funds.

Payment of the Award

The Guidance makes clear that an award is not guaranteed, and both the provision of any award and the amount of the award to be paid to a whistleblower are at the sole discretion of DOJ, which has caused some negative comments from counsel who represent whistleblowers. 

If DOJ determines that an award will be paid and DOJ finalizes a successful forfeiture, a whistleblower may receive (1) up to 30% of the first $100 million of net proceeds; (2) up to 5% of   net proceeds between $100 million and $500 million and (3) no award on net proceeds forfeited above $500 million. 

To determine the amount to be paid, DOJ will take into consideration factors similar to those that the SEC considers under its whistleblower program, such as the significance of the information provided and assistance provided by the whistleblower. Notably, DOJ may increase the award granted to an individual who reported the information internally through the company’s own compliance channels—a provision designed to encourage whistleblowers to report their concerns through the company’s compliance program first, and thereby to give the company a (limited) chance to address them and report issues themselves, if appropriate. On the other hand, the extent of the individual’s involvement in the reported misconduct, unreasonable delay in reporting the misconduct, or interference with internal compliance or internal reporting systems may decrease the amount awarded by DOJ. 

Key Considerations for Companies

• During the development of the DOJ Whistleblower Pilot Program, members of the white-collar defense bar expressed concerns that a whistleblower program could undermine corporations’ ability to police themselves, if the Whistleblower Pilot Program discouraged individuals from speaking up about wrongdoing internally and giving the company a chance to address it. To address this concern, the Whistleblower Pilot Program provides that DOJ may increase the award granted to whistleblowers who reported their concerns internally, although they still must report to DOJ within 120 days. Given that the Guidance does not require employees to report concerns internally first, it remains to be seen whether this approach will be effective in incentivizing internal reporting.
• Through the Whistleblower Pilot Program and the temporary amendment to the Corporate Enforcement Policy, DOJ is seeking to increase the pressure on companies to promptly self-report potential misconduct to DOJ. However, corporate self-disclosure to DOJ still carries significant risks, including the potential for companies to incur significant costs associated with protracted government investigations. Despite DOJ continuing to increase the pressure on companies, self-reporting decisions remain fact-specific considerations that must be carefully evaluated against the totality of the circumstances.
• The impact of the Whistleblower Pilot Program remains to be seen, but it is possible that companies, especially those not already subject to existing whistleblower and qui tam frameworks, will now be at an increased risk of receiving whistleblower allegations and DOJ inquiries as a result of the Whistleblower Pilot Program. 
• In addition, now that whistleblowers are being monetarily incentivized by DOJ to raise allegations, including in situations where the whistleblower does not even have “knowledge” of wrongdoing but has instead based their allegations on an “independent analysis” that they have conducted, companies may also be at an increased risk of receiving frivolous allegations that will need to be assessed and may strain compliance resources. 
• It also merits noting that DOJ appears to not only be seeking to monetarily incentivize individuals to raise allegations to generate leads for new cases, but also appears to be incentivizing individuals to bring forward information through the Whistleblower Pilot Program in cases where DOJ already has an existing investigation. This means companies under active investigation by DOJ could find themselves under expanded and enhanced scrutiny from DOJ during investigations, especially in situations where counsel for individuals seek to encourage their clients to take advantage of the Whistleblower Pilot Program and proactively raise information to DOJ in advance of the individual or their counsel receiving any requests from DOJ.