Whistleblower Program

Westlaw Today powered by Reuters

By Seth D . DuCharme , Esq ., Mark C . Hunting , and Margaret B . Beasley , Esq ., Bracewell LLP * MARCH 20 , 2024

In recent years , the Department of Justice ( DOJ ) has rolled out a significant and increasing number of carrots and sticks aimed at deterring and punishing white collar crime . Speaking at the American Bar Association White Collar Conference in San Francisco on March 7 , Deputy Attorney General Lisa Monaco announced the latest : a pilot program to provide financial incentives for whistleblowers .

While the program is not yet fully developed , the premise is simple : if an individual helps DOJ discover significant corporate or financial misconduct , she could qualify to receive a portion of the resulting forfeiture , consistent with the following predicates :

• The information must be truthful and not already known to the government .

• The whistleblower must not have been involved in the criminal activity itself .

• Payments are available only in cases where there is not an existing financial disclosure incentive .

• Payments will be made only after all victims have been properly compensated .

Money motivates

Harkening back to the “ Wanted ” posters of the Old West , Monaco observed that law enforcement has long offered rewards to incentivize tipsters . Since the passage of Dodd Frank almost 15 years ago , the SEC and CFTC have relied on whistleblower programs that have been incredibly successful .

In 2023 , the SEC received more than 18,000 whistleblower tips ( almost 50 percent more than the previous record set in FY2022 ), and awarded nearly $ 600 million — the highest annual total by dollar value in the program ’ s history . Over the course of 2022 and 2023 , the CFTC received more than 3,000 whistleblower tips and paid nearly $ 350 million in awards — including a record-breaking $ 200 million award to a single whistleblower .

Programs at IRS and FinCEN have been similarly fruitful , as are qui tam actions for fraud against the government . But , Monaco acknowledged , those programs are by their very nature limited . Accordingly , DOJ ’ s program will fill in the gaps and address the full range of corporate and financial misconduct that the Department prosecutes . And though only time will tell , it seems likely that this program will generate a similarly large number of tips .

The Attorney General already has authority to pay awards for “ information or assistance leading to civil or criminal forfeitures ,” but it has never used that power in any systematic way . Now , DOJ plans to leverage that authority to offer financial incentives to those who ( 1 ) disclose truthful and new information regarding misconduct ( 2 ) in which they were not involved ( 3 ) where there is no existing financial disclosure incentive and ( 4 ) after all victims have been compensated .

If an individual helps DOJ discover significant corporate or financial misconduct , she could qualify to receive a portion of the resulting forfeiture .

The Department has begun a 90-day policy sprint to develop and implement the program , with a formal start date later this year . Acting Assistant Attorney General Nicole Argentieri explained that , because the statutory authority is tied to the department ’ s forfeiture program , the Department ’ s Money Laundering and Asset Recovery Section will play a leading role in designing the program ’ s nuts and bolts , in close coordination with US Attorneys , the FBI and other DOJ offices .

Monaco spoke directly to potential whistleblowers , saying that while the Department will accept information about violations of any federal law , it is especially interested in information regarding :

• Criminal abuses of the US financial system ;

• Foreign corruption cases outside the jurisdiction of the SEC , including FCPA violations by non-issuers and violations of the recently enacted Foreign Extortion Prevention Act ; and

• Domestic corruption cases , especially involving illegal corporate payments to government officials .

Like the SEC and CFTC whistleblower programs , DOJ ’ s program will allow whistleblower awards only in cases involving penalties above a certain monetary threshold , but that threshold has yet to be determined .

Thomson Reuters is a commercial publisher of content that is general and educational in nature , may not reflect all recent legal developments and may not apply to the specific facts and circumstances of individual transactions and cases . Users should consult with qualified legal counsel before acting on any information published by Thomson Reuters online or in print . Thomson Reuters , its affiliates and their editorial staff are not a law firm , do not represent or advise clients in any matter and are not bound by the professional responsibilities and duties of a legal practitioner . Nothing in this publication should be construed as legal advice or creating an attorneyclient relationship . The views expressed in this publication by any contributor are not necessarily those of the publisher .