DOJ Issues its Highly Anticipated Whistleblower Awards Pilot Program

In March 2024, at the American Bar Association’s 39th National Institute on White Collar Crime, Deputy Attorney General (“DAG”) Lisa Monaco announced that the Department of Justice (“DOJ” or the “Department”) intended to create a new whistleblower rewards pilot program.[1] The program would offer financial incentives to whistleblowers that report corporate misconduct and increase pressure on companies to voluntarily self-disclose their misconduct. In explaining the need for this program, DAG Monaco observed that existing whistleblower reporting mechanisms run by multiple U.S. agencies, while successful, were similar to a “patchwork quilt” that failed to address the full range of corporate and financial crime that DOJ prosecutes. The new pilot would thus serve as a gap-filling mechanism and create a greater level of awareness for potential whistleblowers regarding their reporting options. 

After soliciting feedback regarding the program’s anticipated design from relevant stakeholders during a so-called “90-day sprint,” on August 1, 2024, DOJ’s Criminal Division released the highly anticipated Corporate Whistleblower Awards Pilot Program (the “Whistleblower Awards Pilot Program” or the “Pilot Program”). As previewed by DAG Monaco in March, the Pilot Program guidance explains that the prospect of an award is expected to incentivize individuals to report corporate criminal conduct that would otherwise go undetected or be difficult to prove. The Pilot Program is also intended to motivate companies to create robust and effective compliance systems that detect and deter misconduct in the first instance, including by encouraging internal reporting of complaints, and then self-reporting misconduct to the DOJ when appropriate. 

Under the Pilot Program, whistleblowers may be eligible for an award (at the Department’s sole discretion) when they provide original, truthful information to DOJ about certain crimes involving 1) financial institutions, 2) foreign corruption, 3) domestic corruption, or 4) federal health care offenses not covered by the False Claims Act, if that information later results in a forfeiture exceeding $1,000,000 in net proceeds. 

Additional requirements and key details regarding the applicability of the Pilot Program are outlined below.

Eligible Individuals

A qualifying whistleblower must be an individual who furnishes information to the Department, either alone or in conjunction with other individuals. The following groups are not eligible for awards under the Pilot Program:

• Companies/entities. 

• Individuals who would be eligible for an award through another U.S. government or statutory whistleblower, qui tam, or similar program.

  • Individuals who are unsure whether they qualify for another U.S. government program or the Pilot Program are instructed to submit information to both programs so that the Department can render an eligibility determination. 

• Individuals who work for DOJ or any law enforcement organization (either now or when the original information was acquired) and certain family/household members of those who work for DOJ.

• Individuals who are elected or appointed foreign government officials (either now or when the original information was acquired).

• Individuals who meaningfully participated in the criminal activity, including by directing, planning, initiating, or knowingly profiting from it. 

  • However, the Department may determine that an individual with a sufficiently minimal role in the reported scheme remains eligible for an award. Such “minimal participant[s]” may also receive a non-prosecution agreement (“NPA”) through the Criminal Division’s separate Pilot Program on Voluntary Self-Disclosure for Individuals, which we previously analyzed here. Potentially eligible individuals must only submit the required information pursuant to the Whistleblower Awards Pilot Program. Even if the whistleblower is deemed ineligible for a financial award, DOJ will automatically assess whether the individual remains eligible for an NPA.

• Individuals who, in relation to their submissions, make false, fictitious, or fraudulent representations; withhold material information; or otherwise obstruct the Department’s investigation.  

• Individuals who acquire information from a person who is ineligible for an award under the Pilot Program, unless the information furnished relates to potential wrongdoing by the ineligible person.

• Individuals who provided information to the Department before August 1, 2024. 

Original Information Requirement

The reporting individual must provide original information, in writing, to the Department. To qualify as original, among other factors, the information must be non-public and not previously known by DOJ. Even if DOJ has an open investigation related to the area reported on, the information furnished will qualify as original if it materially adds to the information DOJ already possesses. 

Where a whistleblower first reports the potential misconduct internally through their company’s whistleblower, legal, and/or compliance reporting mechanism, they must also report to the Department within 120 days of reporting internally in order to remain eligible for a potential award.[2] 

The Pilot Program guidance sets forth example scenarios that may render information not original, such as when the information is obtained through a communication that was subject to the attorney-client privilege. Importantly, information will generally be deemed not original if it was obtained from one of the following individuals: an officer, director, trustee, or partner of an entity who received the allegation from another person and/or learned the information in connection with the entity’s processes for identifying, reporting, and addressing potential violations of the law; an employee (or member of an outside firm retained by the entity) who performs compliance or internal audit responsibilities for the entity and learned the information through that function; a member of a firm retained to conduct an investigation into the alleged conduct; an associate of a public accounting firm that was engaged by the entity and discovers the information pursuant to their engagement.[3] 

Applicable Subject Areas

The whistleblower’s disclosure must relate to one of the following areas of corporate misconduct:

• Conduct Involving Financial Institutions: Violations by financial institutions, their insiders, and/or agents (e.g., schemes involving money laundering) and fraud against or non-compliance with financial institution regulators.[4] 

• Foreign Corruption and Bribery: Corporate violations related to foreign corruption and bribery (e.g., violations of the Foreign Corrupt Practices Act).[5] 

• Domestic Corruption: Violations committed by or through companies related to the payment of bribes or kickbacks to domestic public officials.

• Select Health Care Offenses: Select offenses in the health care context that cannot be pursued via qui tam actions:

  1. Violations involving private or other non-public health care benefit programs.[6] 

  2. Fraud against patients, investors, and other non-governmental entities in the health care industry.[7] 

  3. Any other federal violations involving conduct related to health care that is not covered by the Federal False Claims Act.

Submission and Cooperation Characteristics

Under the Pilot Program, a whistleblower’s submission must be voluntary, truthful, and complete, and the whistleblower must cooperate with the Department following their submission:

• Voluntary: Voluntariness requires that 1) the submission occurs before the individual receives any form of an inquiry, request, or demand related to the subject matter of the submission from a federal law enforcement agency or civil enforcement agency; 2) the individual has no preexisting obligation to disclose the information; and 3) the submission occurs in the absence of any government investigation into the information or threat of imminent disclosure of the information to the government or public.

  • Where an individual voluntarily reports original information to their employer and then subsequently receives an inquiry, request, or demand from the government, their response to the government will still qualify as voluntary as long as it occurs within 120 days of the internal report.

• Truthful and Complete: An individual must provide truthful and complete information, including all information of which they have knowledge related to the misconduct. Therefore, if the reporting individual was involved in the misconduct, they must disclose the complete extent of their own role.

• Cooperation: The reporting individual must cooperate with DOJ in its investigation of related conduct and any criminal or civil actions.  This effort may include providing testimony in a proceeding; producing documents, records, or other evidence; and working proactively with law enforcement officers and agents.   

Forfeiture Threshold 

The whistleblower’s information must lead to a successful forfeiture exceeding $1,000,000 in net proceeds by the Department in connection with a prosecution, corporate criminal resolution, or civil forfeiture action.[8] No award shall be available in instances where there is not a successful forfeiture.

When assessing whether the submission led to a successful forfeiture, the Department will consider factors such as whether the original information was sufficiently specific, credible, and timely to cause DOJ to open an investigation, reopen an investigation, inquire about different conduct in a pending investigation, or significantly further a pending investigation through new information.  The Pilot Program guidance states that awards are entirely discretionary and not guaranteed.

Award Amounts and Priority

Whistleblower(s) may be eligible for an award of up to 30% of the first $100 million in net proceeds forfeited and up to 5% of any net proceeds forfeited between $100 million and $500 million.  They will not receive an award for net proceeds forfeited above $500 million. While DOJ has discretion to determine an appropriate award amount, there is a presumption that it will award the full 30% of the first $10 million in net proceeds forfeited.[9] 

Within this framework, there are specific considerations which may increase a whistleblower’s award percentage:

• Significance of Information Provided: DOJ will assess how significant the information provided was to the success of its prosecution, corporate criminal resolution, and any associated forfeiture action. 

• Degree of Assistance from the Whistleblower: the Department will consider whether the whistleblower provided ongoing, extensive, and timely assistance (e.g., interpreting key evidence, identifying lines of inquiry or other sources of evidence); the timeliness of the whistleblower’s initial report to the Department and/or internally at their company; resources conserved due to the whistleblower’s assistance; efforts taken by the whistleblower to remediate the harm reported on; and any unique hardships experienced by the whistleblower as a result of reporting.

• Participation in Internal Compliance Systems or Internal Reporting: Participation in internal compliance systems and reporting mechanisms will increase a whistleblower’s award.  Accordingly, DOJ will consider whether the whistleblower reported potential misconduct through internal company processes (and the timing of the whistleblower’s internal report compared to their report to the Department) in addition to the whistleblower’s assistance with any internal investigation or inquiry by the company. 

  • The amount or percentage that a potential award will be increased due to internal reporting is not specified.  It therefore remans unclear how many whistleblowers will choose to report internally before approaching the Department.  Whistleblowers who fear retribution from their company may only elect to provide the Department with a direct submission, even if that course of action leads to a reduced award. 

The Pilot Program also sets forth considerations which may decrease the award percentage:

• Culpability: An individual who was involved in the misconduct but only constituted a “minimal participant” may still be eligible for an award.[10] The Department will assess an individual’s role in the scheme to determine if they are eligible for an award, and if so, how much the award should be decreased based on their involvement. 

• Unreasonable Delay: DOJ will consider whether the whistleblower was unreasonably delayed in reporting potential criminal violations. Examples of relevant factors here include whether the whistleblower was aware of misconduct but failed to take steps to report or prevent it; whether the whistleblower only reported relevant facts after learning about a related inquiry, investigation, or enforcement action; and whether and when the whistleblower reported relevant facts internally.

• Interference with Internal Compliance and Reporting Systems: Where the whistleblower interacted internally with their company’s compliance/reporting system, DOJ will consider whether the individual undermined the integrity of that system. This inquiry may include evidence that the whistleblower knowingly interfered with the entity’s legal, compliance, or audit procedures to prevent or delay detection of the reported violation or made materially false representations, provided writings/documents with false statements, or withheld significant information that hindered the entity’s ability to detect, investigate, or remediate the misconduct.

• Management Role: An award may be decreased or denied if the whistleblower holds a management role over the personnel or offices involved in the misconduct. DOJ will thus take into account a whistleblower’s title and their decision-making authority related to the misconduct, whether the whistleblower contributed to the failures of the compliance system to detect and prevent the misconduct, whether the whistleblower created a corporate culture that deprioritized compliance programs and systems, and whether the whistleblower was notified of red flags identifying possible misconduct but failed to take steps to address the issue. 

In terms of priority, owners and lienholders with a valid interest in the forfeited property that is not addressed in the forfeiture proceeding will be compensated first via remission or mitigation. The Pilot Program guidance further states that qualifying individual victims with pecuniary losses from the scheme must be compensated to the fullest extent possible before a whistleblower can receive their award. However, where a government agency or corporate entity is a victim, a whistleblower will receive their award before the agency or entity is compensated. 

Additional Considerations and Procedures

A whistleblower or their attorney can submit original information under the Pilot Program by utilizing DOJ’s newly-created and detailed intake form, which requires a declaration under the penalty of perjury that submitted information is true and correct. DOJ will not publicly disclose information that could reasonably be expected to reveal a whistleblower’s identity (provided such a disclosure is not required by law or Department policy) unless and until their identity must be disclosed to a defendant in connection with a judicial or administrative proceeding. Identity information may be shared with another enforcement agency if necessary to accomplish a valid law enforcement purpose or to protect the public. 

An individual who wishes to remain anonymous in the first instance may utilize an attorney to make the submission on their behalf.  However, DOJ reserves the right to require identity information as necessary to prosecute a case and any whistleblower’s identity must be disclosed and verified before an award is paid. 

An individual who experiences retaliation due to their report is asked to provide that information to the Department. Corporate retaliation may result in an enforcement action and/or the denial of cooperation credit in connection with a corporate resolution.

DOJ will publish information about all successful forfeitures in the relevant subject areas on the corporate whistleblower webpage.  Whistleblowers who submitted a tip under the Pilot Program will have 90 days from the publication of a successful forfeiture to file a claim form requesting an award. After the claim form is evaluated by DOJ, the Department will send the whistleblower an Award Determination which explains whether the claim was granted, and if so, in what amount. 

Pilot Program Term 

The Pilot Program, effective immediately, is a three-year initiative managed by the Criminal Division’s Money Laundering and Asset Recovery Section. DOJ has specifically reserved the right to modify any aspect of the Pilot Program during this three-year period, including the eligibility considerations or applicable subject areas. The Department will also determine at the end of the three-year period whether the Whistleblower Awards Pilot Program should be extended or modified. 

Connection to DOJ’s Efforts to Incentivize Voluntary Self-Disclosure of Corporate Misconduct

The Pilot Program is intended to bolster recent Department policies that incentivize companies to voluntarily self-disclose their misconduct and increase pressure on the corporate community to make such decisions swiftly. A DOJ fact sheet issued in conjunction with the Pilot Program states: “the more ways that people can report corporate misconduct, the greater the incentive for companies and individuals to report wrongdoing as soon as they learn of it.”

To further this goal, the Pilot Program announcement was accompanied by a temporary amendment to DOJ’s Corporate Enforcement and Voluntary Self-Disclosure Policy (the “CEP”).[11] The amendment clarifies that a company that voluntarily self-reports misconduct to DOJ within 120 days of receiving an internal whistleblower report may be eligible for a presumption of a declination—if the company voluntarily self-reports before DOJ contacts the company. 

Accordingly, companies should evaluate the effectiveness of their compliance systems, particularly with respect to employee hotlines and other internal reporting mechanisms. While employees have the option to report internally under the Pilot Program (and doing so may increase their potential award by an unspecified amount), bringing their information to the company’s attention before reporting to DOJ is not required. Therefore, incentive-based systems that encourage internal reporting of potential misconduct and meaningful employee engagement with a company’s compliance function may prove particularly helpful. 

Companies that receive an internal report regarding potential misconduct that falls within the scope of the Pilot Program will have 120 days or less to conduct an expedited investigation and determine whether or not to voluntarily self-disclose. Even absent an internal report, companies that unveil potential violations may already be on the clock. If a whistleblower opts to make a direct submission to DOJ without notifying the company, the Department may ultimately contact the company before it has the opportunity to self-report. In such a scenario, the benefits associated with voluntary self-disclosure will no longer be available. Effective compliance systems that identify misconduct in the first instance will maximize a company’s ability to assess risk and avail themselves of the benefits associated with self-reporting before those benefits are lost.