DOJ Becomes Latest Agency to Offer Financial Incentives for Whistleblowers

At a Glance

• There will be a formal “DOJ-run whistleblower rewards program” that will provide financial rewards to individuals who report corporate criminal misconduct to the government and “drive companies to invest further in their own internal compliance and reporting systems.”
• Although it will continue to develop “the particulars,” the DOJ has committed to implementing the program in pilot form within the next 90 days, “with a formal start date later this year.”
• While other federal criminal divisions are rolling out nonprosecution-based whistleblower incentives, the financial reward component of the DOJ’s program makes it markedly different — and potentially, uniquely challenging.

On March 7, 2024, Deputy Attorney General Lisa Monaco announced that the U.S. Department of Justice (DOJ) is creating a program that will offer financial rewards to whistleblowers who bring the DOJ information concerning criminal corporate misconduct. While all of its details are not finalized, Monaco officially publicized the coming program in her keynote speech at the American Bar Association’s National Institute on White Collar Crime meeting in San Francisco. The program marks the latest effort in the Biden administration’s push for more self-disclosure and investment in corporate compliance (as we have been reporting on) and both follows and expands upon those offered by other federal agencies, such as the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), as whistleblowers will now have the opportunity to profit financially from assisting the DOJ in criminal prosecutions.

Monaco acknowledged that the DOJ has previously used its authority to pay whistleblowers, but stated that it did so only “here and there.” Now, there will be a formal “DOJ-run whistleblower rewards program” particularly aimed at investigating and prosecuting corporate domestic financial crimes and Foreign Corrupt Practices Act (FCPA) violations. Monaco explained that the program was designed to “create new incentives for individuals to report misconduct to [DOJ]” and “drive companies to invest further in their own internal compliance and reporting systems.”

So far, the program has a few key components:

1. The whistleblower cannot be involved in the underlying criminal activity;
2. The information they provide must be accurate;
3. The information must be previously unknown to the government;
4. The whistleblower cannot be eligible to benefit from “an existing financial disclosure incentive,” such as a qui tam;
5. Payment will be a portion of the forfeiture that results from the DOJ’s investigation of the misconduct; and
6. Whistleblowers can only receive part of that forfeiture after victims have been compensated.

Although it will continue to develop “the particulars,” the DOJ has committed to implementing the program in pilot form within the next 90 days, “with a formal start date later this year.”

While an increased amount of corporate criminal investigations and prosecutions appears to be the goal — and likely result — the DOJ has not yet spoken to potential unintended consequences of the program. For example, the program will almost certainly create a new avenue for defendants to demand discovery of exculpatory information and to cross-examine witnesses at trial on their financial bias. Accordingly, it is unclear how well it will be received by line prosecutors who will deal with the increased discovery burden, and perceived by juries asked to trust paid witnesses in order to convict a person or corporation. And although other federal criminal divisions such as the Southern District of New York are rolling out nonprosecution-based whistleblower incentives, the financial reward component of the DOJ’s program makes it markedly different — and potentially, uniquely challenging.

For More Information

We will continue to monitor the development of the DOJ’s program and keep you apprised of new details as they are released. Until such time, please do not hesitate to contact us if you have any questions.