On August 1, 2024, the Department of Justice launched their Corporate Whistleblower Awards Pilot Program (Program) to find and prosecute corporate crime. A whistleblower who provides the Criminal Division with original and truthful information about corporate misconduct that results in forfeiture may be eligible for an award under the Program.
The information must relate to one of the following areas: (1) certain crimes involving financial institutions, from traditional banks to cryptocurrency businesses; (2) foreign corruption involving misconduct by companies; (3) domestic corruption involving misconduct by companies; or (4) health care fraud schemes involving private insurance plans. More details are available in the program guidance, found here dl (justice.gov). These areas appear to focus on conduct involving private, non-government funds that is unlikely to be covered by the False Claims Act (FCA). Cases brought by whistleblowers under the FCA have been a tremendous source of cases and revenue for the federal government.
The Guidance provides further detail regarding the following Program criteria.
- An individual may be eligible for a whistleblower award if, alone or jointly with other individuals, they provide the DOJ with original information in writing, and that information leads to criminal or civil forfeiture exceeding $1,000,000 in net proceeds.
- An individual must provide, in writing, original information.
- An individual’s information must pertain to one of the above subject matter areas.
- An individual’s submission must be voluntary.
- An individual must provide truthful and complete information, meaning they must provide all information of which they have knowledge related to any misconduct, including misconduct in which they participated or of which they are aware, the complete extent of their own role, if any, in the misconduct, and all matters about which the Department may inquire.
- An individual must cooperate with the Department in its investigation of related conduct and criminal or civil actions.
- The information must lead to successful forfeiture exceeding $1,000,000 in net proceeds forfeited by the Department in connection with a prosecution, corporate criminal resolution, or civil forfeiture action related to corporate criminal conduct.
There are additional considerations for payment of an award, which is based on the forfeiture amount, and additional guidance. The additional provisions address (1) confidentiality by the DOJ, (2) anonymous submissions via an attorney, (3) no requirement of attorney representation, (4) retaliation, (5) entity’s impeding DOJ communications, (6) barring frivolous or fraudulent claimants, and (7) Congressional notification. The guidance also includes procedures for public commission and applying for an award.
Takeaways
Based upon other federal whistleblower programs, like the IRS, SEC, and particularly the FCA, this program will likely result in many investigations and cases. Therefore, it is imperative that corporations, and particularly those doing business in the areas of focus, ensure that they have robust compliance programs. They also need to be proactive in consulting counsel regarding their structure and transactions.
Moreover, companies should be diligent in their employment law practices. That means not only complying with the law, but also making sure that personnel files are appropriately documented when there are employee issues. Many FCA actions are filed by former disgruntled employees who are terminated for performance issues. However, their employment files often do not reflect their poor performance. Thus, the entity is often challenged in defending retaliation whistleblower claims.