Whistleblowers Wanted: Proliferation of DOJ Whistleblower Policies Invites Harmonization by the Trump Administration

Inspired by existing whistleblower programs, including programs administered by the Securities and Exchange Commission (the “SEC”), the Commodity Futures Trading Commission, the Internal Revenue Service, and the Financial Crimes Enforcement Network, DOJ’s Pilot Program seeks to close the gap between these existing programs and the full scope of corporate conduct that DOJ investigates. The prospect of a whistleblower bounty may spur at least a temporary increase in investigations in the limited areas covered by the Pilot Program, and it should prompt companies to ensure their compliance programs are up to date in the near term. Companies should also be aware of a proliferation of district-specific programs announced shortly thereafter that provide additional incentives for whistleblowers to come forward.

On March 7, 2024, approximately two months after the United States Attorney’s Office for the Southern District of New York surprised the white collar investigations bar by announcing its own whistleblower program, Deputy Attorney General Lisa Monaco announced that DOJ was “launching a 90-day sprint” to develop a nationwide whistleblower program. On August 1, 2024, DOJ announced the long-awaited rollout of its Pilot Program.

The Pilot Program offers a potential award to an individual (i.e., non-corporate) whistleblower who provides DOJ with original information that leads to a forfeiture of over $1,000,000 in net proceeds in connection with a successful DOJ resolution in one of four areas covered by the program: violations involving financial institutions, violations involving foreign corruption (excluding violations by public companies), violations related to domestic corruption, and federal healthcare offenses, such as fraud involving private insurers or patients and other offenses not already covered by the False Claims Act. The Pilot Program will run for three years and will be managed by DOJ Criminal Division’s Money Laundering and Asset Recovery Section.

A whistleblower’s potential bounty could be substantial. The award could be up to 30% of the first $100 million in net proceeds forfeited, and up to 5% of net proceeds forfeited between $100 million and $500 million, with no additional award for proceeds forfeited above $500 million. However, the Pilot Program only offers whistleblowers a cut of the forfeiture proceeds, rather than the proceeds of fines or disgorgement, which is generally only a fraction of DOJ’s recovery in corporate prosecutions, if there is any forfeiture component at all. Further, the ultimate amount of any award is subject to DOJ’s sole discretion, which, when combined with the lengthy list of disqualifiers and eligibility limitations, gives little comfort to whistleblowers that they will be compensated to the same degree as qui tam whistleblowers in the False Claims Act context.

Nevertheless, the Pilot Program succeeds in creating at least some new incentives for whistleblowers to report certain misconduct to DOJ, and the Pilot Program may have already begun driving new reports. According to the Wall Street Journal, DOJ received reports from more than 100 whistleblowers in the first month of the Pilot Program.¹ In addition, DOJ has begun committing personnel to the Pilot Program by naming Patrick Gushue, a trial attorney with the Money Laundering and Asset Recovery Section, as the Pilot Program’s acting director. DOJ has also staffed the program with a team of prosecutors from three divisions.

Meanwhile, numerous U.S. Attorney’s Offices around the country have begun to enact and implement their own, at times contradictory, whistleblower pilot programs for individuals. To date, these policies have been enacted in the U.S. Attorney’s Offices for the Central District of California, the Southern District of Florida, the Northern District of Illinois, the District of New Jersey, the Eastern District of New York, the Southern District of Texas, the Eastern District of Virginia, and the District of Columbia. Each of these pilot programs applies to individual participants in corporate criminal activity who voluntarily disclose wrongdoing and fully cooperate with law enforcement. These programs do not offer financial awards like DOJ’s Pilot Program, but they do provide stronger assurances of deferred or non-prosecution agreements for co-operators.

These district-specific programs vary in multiple aspects. For example, the Northern District of Illinois program only has a duration of six months and applies to knowledge of criminal wrongdoing gained by virtue of the whistleblower’s employment, while others have no defined end date and are not limited to matters discovered during the course of employment. The Northern District of Illinois and District of New Jersey programs do not enumerate all types of offenses that a whistleblower may report, while other programs apply to defined lists of crimes, including fraud and corporate control failures, intellectual property theft, state or local bribery, and money laundering, among others. Also, the programs consider different factors favoring deferred or non-prosecution agreements. The Northern District of Illinois program lists five factors, while the Eastern District of New York program lists eleven. For example, Eastern District of New York prosecutors are charged to consider whether a whistleblower is likely to remain located outside of the United States of America, while such a consideration is not relevant to other prosecutors’ determination as to whether an award should be offered.

The below chart sets forth the most significant differences in the whistleblower programs now in place at different offices around the country:

The Pilot Program and the accompanying proliferation of policies across federal districts have the potential to significantly change the corporate criminal enforcement landscape because there are significant new incentives for whistleblowers to come forward and notify DOJ about wrongdoing to investigate. Moreover, such incentives also meaningfully increase the investigation and enforcement risks for companies and compliance officers. With offices taking different approaches to whistleblower award programs, one easy fix for the Trump administration to consider will be the adoption of standard factors for federal prosecutors to consider when evaluating treatment of whistleblowers in corporate criminal cases moving forward. In the meantime, companies and individuals seeking to avail themselves of the benefits of DOJ’s Pilot Program, and corporate compliance officers hoping to navigate the potential pitfalls that exist, would be well-advised to seek the assistance of competent counsel to help.

¹ Mengqi Sun, DOJ Sees Tips Flow in Over First Month of Pilot Whistleblower Program, Wall St. J. (Sept. 18, 2024), https://www.wsj.com/articles/doj-sees-tips-flow-in-over-first-month-of-pilot-whistleblower-program-d2915104.