WASHINGTON, DC – AUGUST 18: The Department of Justice (DOJ) building on Thursday, Aug. 18, 2023 in … [+]
In August the Justice Department started the Corporate Whistleblower Awards Pilot Program and it has already resulted in 200 people providing tips.
Whistleblowing programs are an essential weapon in the combatting white collar crime where complex crimes are often difficult to discover without insider information.
The program applies to crimes of financial institutions that goes beyond traditional banks to include cryptocurrency businesses as well as foreign criminal corporate acts and health care fraud schemes involving private insurance plans.
The Justice Department’s whistleblower program applies to people who provide original, non-public and voluntary information of criminal conduct that leads to financial penalties of more than $1 million. If the information provided by the whistleblower results in a successful prosecution either civilly or criminally that brings a criminal or civil forfeiture the whistleblower may be eligible for a payment of up to 30% of the first $100 million forfeited by wrongdoers and smaller percentages for larger amounts.
Whistleblower Payments
Awards to whistleblowers pursuant to the Pilot program are discretionary by the Justice Department, however, the entire basis for the program is to provide an incentive for those people with knowledge of white collar crime that would, without the help of whistleblowers, be difficult to detect or prove so awards will generally be approved so long as the whistleblower did not participate in the wrongdoing they are reporting and even in those situations the Justice Department will consider non-prosecution agreements in some circumstances as an incentive for reporting.
Whistleblowers are not eligible for payments if they meaningfully participated in the criminal activity they reported, including by directing, planning, initiating, or knowingly profiting from that criminal activity.
Retaliation
Retaliation against whistleblowers by the companies for which they work is always a concern which is why confidentiality and anonymity of the whistleblower is an essential part of the program. Whistleblowers who wish to report tips anonymously can do so under the Pilot program by submitting their information through an attorney.
As a further incentive to companies not to retaliate against whistleblowers, any such action will be a factor in the Justice Department’s consideration of whether the company gets credit for cooperating in any investigation.
Self Reporting
The Pilot program also encourages companies to voluntarily self-report to the Justice Department within 120 days of receiving an internal whistleblower report by the Justice Department agreeing not to criminally prosecute such companies if the companies report to the Justice Department before it contacts the company. This will not apply however if there are aggravating factors, such as recidivism or pervasive misconduct.
Other Whistleblower Programs
While this is the first whistleblower program at the Justice Department, the Internal Revenue Service has had an effective whistleblowing program since 2006. In 2012 it paid $104 million to Bradley Birkenfeld a banker at UBS whose information uncovered tax evasion through Swiss bank accounts.
The Securities and Exchange Commission and the Commodity Futures Trading Commission have also had effective whistleblowing programs since 2010.
Whistleblower tips accounted for a third of all active CFTC enforcement investigations in fiscal 2023.
The Justice Department’s Pilot program was intended to fill in the gaps left by these programs, for instance by applying to illegal activities done by private companies that are not registered with the SEC.