DOJ Launches New Pilot Program To Allow Whistleblowers Who Report Financial Crimes, Corruption To Avoid Prosecution – White Collar Crime, Anti-Corruption & Fraud

On April 15, 2024, the U.S. Department of Justice (DOJ) Criminal
Division launched a new pilot program to enable whistleblowers to
avoid prosecution when they voluntarily report new information to
federal law enforcement authorities about criminal conduct
involving corporations, including financial crimes, bribery, and
corruption.

The pilot program, entitled “Pilot Program on Voluntary Self-Disclosures for
Individuals,” increases transparency regarding the
circumstances under which prosecutors will offer leniency to
cooperating witnesses and other individuals through use of a
non-prosecution agreement (NPA) when they report potential criminal
misconduct involving corporations.

Quick Hits

• The DOJ launched a new pilot program that will allow
  individuals who report certain criminal conduct to federal
  authorities to avoid prosecution under certain circumstances.




• The pilot program is the latest expansion by the DOJ of its
  whistleblower and voluntary self-disclosure program.




• The pilot program applies to criminal conduct that occurred on
  or after April 15, 2024.

The program incentivizes individual actors to disclose to
federal authorities “actionable, original information about
criminal conduct that might otherwise go undetected or be
impossible to prove.” Reporting individuals must provide full
cooperation, including payment of applicable victim compensation,
restitution, forfeiture, or disgorgement, “including returning
any ill-gotten gains.”

Covered Criminal Conduct

The pilot program applies to reporting of certain criminal
conduct involving corporations, including: violations by financial
institutions such as money laundering, fraud, or fraudulent
noncompliance with financial regulations; foreign corruption and
bribery, including violations of the Foreign Corrupt Practices Act
(FCPA) or the Foreign Extortion Prevention Act; healthcare fraud or
illegal kickbacks; fraud in government contracting by companies
with fifty or more employees; and bribes or kickbacks to domestic
public officials.

Non-Prosecution Criteria

The pilot program sets forth the following criteria for an
individual to be eligible for an NPA:

• Original Information—The reporting
  individual’s disclosure must pertain to new, nonpublic
  information not already known by the DOJ or federal law
  enforcement.




• Voluntary—The disclosure must be made
  “before any request, inquiry, or demand,” when there is
  no “preexisting obligation” to report, and while there is
  no government investigation.




• Truthful and Complete—The disclosure
  must include all information known by the individual making the
  report.




• Full Cooperation—”The reporting
  individual must agree to fully cooperate with and be
  willing and able to provide substantial assistance.”
  (Emphasis in the original.)




• Forfeiture—”The reporting
  individual must agree to forfeit or disgorge any profit from the
  criminal wrongdoing and pay restitution or victim
  compensation.”

Ineligibility

Individuals who are in the position of chief executive officer
(CEO) or chief financial officer of the companies involved are not
eligible for an NPA under the program, nor are individuals who were
the organizers or leaders of the criminal scheme. The program also
does not apply to appointed or elected public officials of domestic
offices “at any level,” including members of law
enforcement. Further, to be eligible for an NPA, individuals must
not have a prior conviction for a felony or any crime involving
fraud or dishonesty.

DOJ Whistleblower Program

The new pilot program is the latest in the DOJ’s ongoing
effort to broaden its whistleblower program and incentivize
voluntary self-disclosure of potential criminal conduct. In March
2024, the DOJ announced it is developing a new pilot program to offer monetary awards to whistleblowers who
provide information on serious financial crimes and foreign and
domestic corruption.

The DOJ is also focused on expanding its voluntary
self-disclosure program for corporations. The department recently
codified its new “Mergers & Acquisitions Safe Harbor
Policy” in the Justice Manual. That program will offer
acquiring companies in a merger deal a presumption of declination
to prosecute if they disclose criminal misconduct that occurred at
the company being acquired that is discovered during the due
diligence process. That policy comes after the DOJ in February 2023
revised national standards for when companies
may be considered to have made a voluntary self-disclosure (VSD) of
misconduct to federal prosecutors that may enable companies to
limit potential criminal liability.

Next Steps

The DOJ’s new policies could increase the likelihood that
employees will go directly to federal authorities before reporting
such misconduct internally and may also potentially increase an
employers’ potential liability. As such, employers may want to
ensure they have up-to-date compliance policies, as well as
whistleblower protections and investigation procedures that
encourage the prompt discovery of any potential misconduct.

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