US DOJ Provides Details About Its Whistleblower Pilot Program in Practice and More US Attorneys’ Offices Launch Their Own Programs

On September 17, 2024, senior officials from the US Department of Justice (DOJ) gave comments offering insight into its new Corporate Whistleblower Awards Pilot Program (“Pilot Program”) as it has operated in practice so far.¹ The purpose of the Pilot Program is to encourage whistleblowers to report evidence of high-priority white collar crimes with the potential to recover financial rewards from any funds forfeited as part of a resulting criminal enforcement action.²

In addition, the US Attorneys for the Eastern District of New York (EDNY), the Eastern District of Virginia (EDVA), the District of New Jersey (DNJ), the Northern District of Illinois (NDIL), the Central District of California (CDCA), and the Southern District of Florida (SDFL) all recently implemented their own whistleblower awards pilot programs, which echo the Southern District of New York’s (SDNY) program (“SDNY Program”) introduced earlier this year³—but with notable differences.

PROVIDING DETAILS ON THE DOJ PILOT PROGRAM IN ACTION

In a speech at NYU School of Law’s Program on Corporate Compliance and Enforcement, Principal Deputy Assistant Attorney General (PDAAG) Nicole M. Argentieri discussed how the Pilot Program should, and has so far, worked in practice.⁴ PDAAG Argentieri recognized that “[c]ompanies play a critical role as the first line of defense against corporate crime” and hailed the Pilot Program as a tool to enhance the DOJ’s mission and “encourage companies to be good corporate citizens.”⁵

Specifically focusing on the gap-filling function the Pilot Program serves, PDAAG Argentieri highlighted specific areas of corporate crime not currently covered by existing whistleblower programs. The first is foreign corruption, such as cases involving bribery at international commodity trading companies that have not issued securities in the United States and thus are not covered by the Securities and Exchange Commission’s (SEC) whistleblower program.⁶ The second is crimes involving financial institutions.⁷ PDAAG Argentieri provided examples of cases that would have fallen into these areas, such as a cryptocurrency exchange that did business in the United States but failed to register with financial regulators as well as efforts to access services from US financial institutions through fraud or misrepresentation.⁸ The Pilot Program is also intended to expand corporate enforcement efforts with regard to bribery of government officials to win contracts as well as fraud schemes targeting private insurers.⁹

PDAAG Argentieri discussed the Pilot Program in practice so far. She noted that the DOJ’s Money Laundering and Asset Recovery Section and Fraud Section led the creation of the program and have sought and received critical input from dozens of experts¹⁰ on design, implementation, and best practices.¹¹ In implementing that feedback, DOJ determined that the Pilot Program would prohibit payments to any whistleblower who meaningfully participated in the criminal activity they report. Whistleblowers who will be eligible are those who are “minimal participants” in criminal activity, defined in the U.S. Sentencing Guidelines as individuals who are “plainly among the least culpable of those involved in the conduct of a group.”

The Pilot Program also incentivizes whistleblowers to use their internal company reporting mechanisms before approaching DOJ. Indeed, making an internal report before reporting to DOJ is a factor that will increase the amount of a whistleblower award. By the same token, DOJ has given companies a 120-day window from when a company receives a whistleblower report to investigate and come forward to report before DOJ expects to reach out to the company in the instances when a whistleblower makes both an internal report and submission to the DOJ. If the company comes forward within that period, DOJ will grant a presumption of a declination.

PDAAG Argentieri further discussed a specific issue raised during the policy sprint thus far—the risks whistleblowers face when they decide to come forward. Although the DOJ’s statutory authority¹² underlying the Pilot Program does not include anti-retaliation provisions, PDAAG Argentieri emphasized: “[O]ur prosecutors will protect whistleblowers’ identities to the fullest extent allowable under law. And if a company retaliates against a whistleblower, we will take all appropriate steps: the company will lose credit for cooperation and remediation and could face sentencing enhancements—and even prosecution—for obstruction of justice.”¹³

SIX MORE US ATTORNEYS’ OFFICES LAUNCH THEIR OWN PROGRAMS

Reflecting the DOJ’s lead in establishing guidelines to encourage self-disclosure, US Attorneys for the EDNY, EDVA, DNJ, NDIL, CDCA, and SDFL implemented their own whistleblower awards pilot programs this month. These programs all largely echo the SDNY Program introduced earlier this year, but with notable differences that reflect areas of concern for particular US Attorneys’ offices.  And in most instances, these programs make clear a path to a non-prosecution prosecution agreement that may have been available before, but provide greater transparency concerning requirements that must be met to receive such a disposition.

As discussed in our earlier Legal Update,¹⁴ the SDNY Program was created to encourage voluntary self-reporting of fraud, corporate control failures, or criminal conduct involving state or local bribery relating to federal, state, or local funds.¹⁵

The SDNY Program offers a non-prosecution agreement in exchange for the individual’s cooperation where six conditions are met: (1) the misconduct has not previously been made known; (2) disclosure was voluntary; (3) the individual is able to provide substantial assistance in the investigation and prosecution; (4) the individual discloses all criminal conduct they have participated in or are aware of; (5) the individual is not an elected government official or official or agent of a federal law enforcement agency or a CEO or CFO or equivalent of a public or private company; and (6) the individual has not engaged in certain criminal conduct including, but not limited to, felonies, conduct involving fraud, and violent or sex-related offenses. ¹⁶

If an individual provides information about the relevant criminal conduct but does not meet the above-listed criteria, prosecutors can still decide to offer a non-prosecution agreement, subject to supervisory approval.¹⁷ This decision would hinge on questions of public interest and necessity and would involve weighing the suitability of non-criminal sanctions and the extent to which the requirements have been met.¹⁸

EDNY PROGRAM

On September 16, 2024, the US Attorney’s Office for the EDNY implemented its Whistleblower Non-Prosecution Pilot Program (“EDNY Program”).¹⁹ The EDNY Program echoes the SDNY Program but limits the program to only the following specific “covered crimes” involving criminal conduct undertaken by two or more individuals, or by or through public or private entities or organizations, including corporations, partnerships, nonprofits, exchanges, money services businesses, banks, financial institutions, investment advisers, or investment funds, involving:

1. Fraud or corporate control failures;
2. Intellectual property theft and related violations;
3. Market integrity;
4. State or local bribery or fraud relating to federal, state, or local funds;
5. Obstruction of justice, perjury, or false statements;
6. Healthcare fraud, including violations of the Anti-Kickback statute; and
7. Money laundering related to any of the prior-listed crimes.²⁰

In contrast to the SDNY Program, the EDNY Program adds the following factors for prosecutors to consider, subject to supervisory approval, in exercising discretion to extend a non-prosecution agreement when the above circumstances are not met: (1) whether the individual is located outside the United States of America and is likely to remain outside of the United States of America; and (2) whether the individual has information about individual(s) or an entity or entities located outside the United States of America and could provide substantial assistance in the investigation and prosecution of those individual(s) or entity or entities. ²¹

EDVA PROGRAM

The US Attorney’s Office for the EDVA implemented its Whistleblower Non-Prosecution Pilot Program (“EDVA Program”) on September 14, 2024.²² The EDVA Program again mirrors the SDNY Program; however, the EDVA Program only applies to (1) criminal conduct by or through public or private companies, exchanges, indexes, financial institutions, investment advisers, investment firms, or investment funds involving fraud or corporate control failures or affecting market integrity; or (2) criminal conduct involving state or local bribery or fraud relating to federal, state, or local funds.²³

The EDVA Program mirrors the SDNY Program’s conditions for an individual to qualify for a non-prosecution agreement as well as the SDNY Program’s factors for consideration in the event the conditions are not met. But the EDVA Program provides an express notice that to receive any non-prosecution agreement, an individual will be required to: (1) forfeit or disgorge proceeds involved in the individual’s criminal misconduct; and (2) pay restitution to victims consistent with the individual’s role in the offense.²⁴
DNJ PROGRAM

On September 13, 2024, the US Attorney’s Office for the DNJ implemented its Whistleblower Non-Prosecution Pilot Program (“DNJ Program”).²⁵ The DNJ Program again adopts substantially the same conditions as the SDNY Program for an individual to qualify for a non-prosecution agreement. However, unlike the DOJ Pilot Program and the SDNY, EDNY, and EDVA programs, the DNJ Program applies solely to individuals who participated in criminal activity and face criminal liability and does not cover individuals who did not meaningfully participate in the criminal activity.²⁶ Additionally, the DNJ Program applies to criminal conduct in the following areas only:

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; and
4. Health care fraud schemes involving private insurance plans.²⁷

NDIL PROGRAM

On September 16, 2024, the US Attorney’s Office for the NDIL implemented its Individual Self-Disclosure Pilot Program for Organizational Misconduct (“NDIL Program”).²⁸ The NDIL Program, too, mimics the SDNY program; however, the NDIL Program is “geared toward individuals who have participated in and have knowledge of otherwise unknown criminal wrongdoing by virtue of their employment.”²⁹ It should be assumed the program does not apply to individuals who did not meaningfully participate in the criminal activity.

Additionally, the NDIL Program creates a category of ineligibility that is not present in the other pilot programs as it does not apply to individuals seeking to provide information about federal tax offenses, violations of the Foreign Corrupt Practices Act, or national security offenses that require the approval of the National Security Division, as detailed in section 9-90.020(A)(1) of the Justice Manual.³⁰

CDCA AND SDFL PROGRAMS

The US Attorneys’ Offices for the CDCA announced its Whistleblower Pilot Program (“CDCA Program”) on August 23, 2024,³¹ and the US Attorney’s Office for the SDFL announced its Whistleblower Non-Prosecution Pilot Program (“SDFL Program”) on September 13, 2024.³² Both programs are an exact copy of the SDNY Program with regard to the types of criminal activity covered as well as the conditions and factors for an individual to qualify for a non-prosecution agreement.³³ Like the EDVA Program, the SDFL Program includes a notice that the individual will be required to forfeit or disgorge proceeds involved in the individual’s criminal misconduct and pay restitution to victims consistent with the individual’s role in the offense.³⁴

TAKEAWAYS

With the proliferation of new whistleblower pilot programs, companies are more encouraged than ever to invest in ensuring that their compliance programs are effective in all aspects—from hiring compliance officers to empowering those officers and staff to have a real voice in holding accountable individuals who engage in wrongdoing. Companies are further encouraged to create internal reporting procedures and test their reliability. If a company reports internally reported misconduct to DOJ within 120 days, the company will be eligible for the greatest benefit under the policy—a presumption of a declination. As PDAAG Argentieri stated: “[W]hen misconduct does occur and companies are considering whether to make a self-report, remember this simple message: call us before we call you.³⁵

¹ Speech, US Department of Justice Office of Public Affairs, Principal Deputy Assistant Attorney General Nicole M. Argentieri Delivers Remarks on Newly Announced Corporate Whistleblower Awards Pilot Program at NYU School of Law’s Program on Corporate Compliance and Enforcement (Sep. 17, 2024).

² For more details on the Pilot Program, please see our Legal Updates US Department of Justice Whistleblower Award Program Goes Live and US Department of Justice Announces Sprint Towards New Whistleblower Reward Program.

³ For more details on the SDNY Program, please see out Legal Update SDNY US Attorney's Office Launches Whistleblower Pilot Program.

⁴ Argentieri Speech, Supra Note 1.

⁵ Id.

⁶ Id.

⁷ Id.

⁸ Id.

⁹ Id.

¹⁰ These experts include officials at other agencies’ whistleblower offices, whistleblower advocates, in-house compliance personnel, white-collar defense attorneys, and academics who specialize in corporate enforcement. 

¹¹ Id.

¹² Section 524(c) of Title 28 of the U.S. Code.

¹³ Argentieri Speech, Supra Note 1.

¹⁴ For more details on the SDNY program, please see out Legal Update SDNY US Attorney's Office Launches Whistleblower Pilot Program.

¹⁵ Id.

¹⁶ The text of the SDNY Whistleblower Pilot Program.

¹⁷ Id.

¹⁸ Id.

¹⁹ Press Release, US Attorney’s Office, EDNY, Whistleblower Policy (Sep. 16, 2024).

²⁰ The text of the EDNY Whistleblower Non-Prosecution Pilot Program.

²¹ Id.

²² Press Release, US Attorney’s Office, EDVA, New Whistleblower Pilot Program Encourages Early Voluntary Self-disclosure of Criminal Conduct (Sep. 14, 2024).

²³ The text of the EDVA Whistleblower Non-Prosecution Pilot Program.

²⁴ Id.

²⁵ Press Release, US Attorney’s Office, DNJ, District of New Jersey Whistleblower Non-Prosecution Pilot Program (Sep. 13, 2024).

²⁶ The text of the DNJ Whistleblower Non-Prosecution Pilot Program.

²⁷ Press Release, Criminal Division, US Department of Justice, Criminal Division Corporate Whistleblower Awards Pilot Program (Aug. 1, 2024).

²⁸ Press Release, US Attorney’s Office, NDIL, Northern District of Illinois U.S. Attorney’s Office in Chicago Announces Individual Self-Disclosure Pilot Program (Sep. 16, 2024).

²⁹ The text of the NDIL Program.

³⁰ Id.

³¹ Press Release, US Attorney’s Office, CDCA, United States Attorney Martin Estrada Announces Implementation of New Whistleblower Pilot Program to Facilitate Increased Prosecutions of High-Level Wrongdoers (Aug. 23, 2024).

³² Press Release, US Attorney’s Office, SDFL, U.S. Attorney Lapointe Announces Southern District of Florida Whistleblower Non-Prosecution Pilot Program (Sep. 13, 2024).

³³ The text of the CDCA Program and the text of the SDFL Program.

³⁴ Id.

³⁵ Argentieri Speech, Supra Note 1.