Washington DC, USA-June 5, 2018: Robert F Kennedy Department of Justice building entrance with American flag above doorway and "The Place of Justice is a Hallowed Place" engraved in stone above the door

Introduction to DOJ’s New Whistleblower Pilot Program

The Department of Justice will begin a new whistleblower pilot program, Deputy Attorney General Lisa Monaco announced during a speech at the American Bar Association’s 39th National Institute on White Collar Crime.  With the announcement of the pilot program, Monaco said, “our message to whistleblowers is clear: the Department of Justice wants to hear from you.”

The new program is intended to encourage individuals to report serious corporate misconduct and fraud by offering them monetary incentives.

Historical Context and the Role of Monetary Incentives

“Going back to the days of ‘Wanted’ posters across the Old West, law enforcement has long offered rewards to coax tipsters out of the woodwork,” Monaco said in her speech.  Currently, the Attorney General can pay monetary awards for information or assistance leading to civil or criminal forfeitures.  Monaco explained that the new program enhances DOJ’s existing tools as historically “we’ve used this authority here and there — but never as part of a targeted program.”

Comparing the DOJ Pilot to SEC and CFTC Programs

While the specifics of the pilot program will be announced in the coming months, the pilot program will be similar to the whistleblower programs at the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).  “Ever since Dodd-Frank created whistleblower programs at the SEC and the CFTC, those agencies have received thousands of tips, paid out many hundreds of millions of dollars, and disgorged billions in ill-gotten gains from corporate bad actors,” said Monaco.

Monaco explained that DOJ’s pilot program was intended to fill in the gaps for conduct that is not covered by existing whistleblower programs.  She noted that the SEC and CFTC programs “and similar ones at IRS and FinCEN — by their very nature — are limited in scope. They only cover misconduct within their agencies’ jurisdictions.”  She added that these programs don’t cover the full range of corporate misconduct DOJ investigates and qui tam rewards under the federal False Claims Act are only available for fraud against the government.

Eligibility and Conditions for Whistleblower Rewards

Under the pilot program, rewards will be available only:

  • for those who submit truthful information not already known to the government;
  • for those not involved in the criminal activity;
  • in cases where there isn’t an existing financial incentive to report the misconduct — including qui tam or another federal whistleblower program; and
  • only after all victims have been properly compensated.

DOJ anticipates a formal start date for the program later this year, but is launching a “90 day sprint” to develop and implement the program after consulting with stakeholders and gathering information to design the whistleblower pilot program.  

Focus Areas and Anticipated Impact of the Pilot Program

Acting Assistant Attorney General Nicole Argentieri stated in her speech at the American Bar Association’s 39th National Institute on White Collar Crime that the criminal division and especially the Money Laundering and Asset Recovery Section (“MLARS”), will be very active in designing the program.

Argentieri also noted areas of particular focus for the program, given that it is intended to fill gaps where current whistleblower programs either don’t offer rewards or exist.  The DOJ hopes the program will be useful in developing foreign corruption cases outside the purview of the SEC, including violations of the Foreign Corrupt Practices Act by non-issuers, and violations of the recently-passed Foreign Extortion Prevention Act.  Other conduct that DOJ is interested in includes criminal abuses of the U.S. financial system and domestic corruption cases, especially involving illegal corporate payments to government officials.  

Argentieri said she expects the DOJ to have a threshold similar to the SEC and CFTC programs, which provide monetary rewards only in instances when the agency’s enforcement action results in sanctions over $1million.  Such a threshold would provide DOJ “a way of focusing our resources on the most significant cases.”

The new whistleblower pilot program reflects a recognition of the valuable role that whistleblowers play in holding accountable those who engage in corporate misconduct and fraud.

Call to Action: Consulting Experienced Whistleblower Attorneys

If you know of fraud and would like to talk to an experienced whistleblower attorney, contact Phillips & Cohen.  Phillips & Cohen is the most successful law firm representing whistleblowers, with recoveries from cases totaling over $13 billion and 21 awards for clients under Dodd-Frank whistleblower reward programs. The firm’s partners include the former first head of the SEC Office of the Whistleblower, the former director of the CFTC’s Whistleblower Office and numerous attorneys with decades of experience representing whistleblowers.

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