DOJ Announces Corporate Whistleblower Award Program

March 8, 2024
Nicolas Enrique O’Connor

Building upon the undeniable successes of the Securities and Exchange Commission (“SEC”) whistleblower program and the Commodity Futures Trading Commission (“CFTC”) whistleblower program, which have, respectively, helped recover over $6 billion and $3 billion in monetary sanctions, the Department of Justice (“DOJ”) announced on March 7, 2024, a new whistleblower award program for corporate fraud and white collar crime.  This marks a broad expansion of the tools available to the federal government to uncover and prosecute a multitude of misconduct by incentivizing individuals to provide information that would not otherwise qualify them for an award from the SEC, CFTC, or analogous programs administered by the Internal Revenue Service (“IRS”) and the Financial Crimes Enforcement Network (“FinCEN”).  Moreover, while the DOJ already rewards whistleblowers who bring qui tam actions on behalf of the federal government under the False Claims Act, that law applies only to fraud on the government.

The DOJ’s pilot program represents an innovative use of existing legislation.  Since the 1980s, a federal statute, 28 U.S.C. Section 524(c)(1)(C), has authorized the DOJ to make discretionary payments of awards to whistleblowers who provide “information or assistance leading to a civil or criminal forfeiture.”  Deputy Attorney General Lisa Monaco noted that, while the DOJ has occasionally made awards under this authority, this new program would be the first effort to systematically use this authority to encourage whistleblowers to come forward.  The DOJ has set a 90-day deadline to develop a pilot program and intends to formally launch the program later this year.

Deputy Attorney General Monaco announced several priority areas for the new DOJ whistleblower program, including criminal abuses of the U.S. financial system, cases involving foreign corruption outside the jurisdiction of the SEC, and domestic corruption cases, “especially involving illegal corporate payments to government officials.”  Existing whistleblower programs are highly targeted – e.g., the SEC program is limited to violations of securities laws and SEC regulations – and many potential whistleblowers have found themselves with information that does not neatly fit into the jurisdiction of specific regulators.  With the advent of the DOJ whistleblower program, information about bank fraud committed by a private company, schemes to bribe regulators, criminal violations of antitrust laws, embezzlement and misuse of corporate funds, corporate espionage, and many other categories of white-collar crime may now be eligible for a whistleblower award.

Whistleblower awards are a critical incentive to compensate whistleblowers for the reputational and career risks they take when reporting misconduct to the government, as seen by the resounding success of existing whistleblower programs.  Still, white-collar crime often thrives unreported in the shadows of corporate America.  The DOJ whistleblower program aims to assist prosecutors in bringing this wrongdoing to light.

Katz Banks Kumin’s attorneys applaud the DOJ’s commitment to better leverage the information from whistleblowers in its enforcement efforts.  Our attorneys regularly assist clients in reporting wrongdoing to federal agencies through the existing whistleblower programs and have helped them secure sizable awards under these programs.  If you have information about corporate wrongdoing that you are considering reporting to the DOJ or another federal agency, contact the experienced lawyers at Katz Banks Kumin.  Your communications with us are confidential and without further obligation.

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