DOJ Announces Pilot Program to Broadly Expand Whistleblower Rewards
In the keynote speech she gave yesterday (March 7) at the American Bar Association’s National Institute on White Collar Crime, Deputy Attorney General Lisa Monaco announced a pilot program that could dramatically change the landscape of whistleblower rewards going forward. Harking back to the days of “Wanted” posters used to go after outlaws across the Wild West, Monaco recognized that “law enforcement has long offered rewards to coax tipsters out of the woodwork.”
She also pointed to the tremendous success of the SEC and CFTC Whistleblower Programs, which have led to tens of thousands of tips and billions of dollars in government recoveries. What has been driving this success is the promise of potential rewards to those who report fraud or misconduct to the agencies which leads to a successful enforcement act.
The False Claims Act is another whistleblower rewards mechanism to which Monaco pointed. The statute authorizes individuals to bring lawsuits on behalf of the government against those that commit fraud against the government. In return, successful whistleblowers can receive a hefty slice (up to 30%) of any government recovery. The government has recovered tens of billions of dollars over the past two decades from False Claims Act actions initiated by whistleblowers.
But as Monaco pointed out, these whistleblower rewards programs — along with the few others that exist like with the IRS and FinCEN — are limited in scope and only cover misconduct within the particular agency’s jurisdiction or when the fraud is directed against the government, not the public more broadly. As Monaco put it:
These programs have proven indispensable — but they resemble a patchwork quilt that doesn’t cover the whole bed. They simply don’t address the full range of corporate and financial misconduct that [DOJ] prosecutes.
So to fill this gap, DOJ plans to create “a DOJ-run whistleblower rewards program” to expand its already-existing authority to pay awards to whistleblowers providing information that leads to civil or criminal forfeitures. With Monaco’s speech, the agency has officially launched what she described as “a 90-day sprint to develop and implement a pilot program, with a formal start date later this year.”
The specific details of the program remain to be seen, but according to Monaco they will be based on the simple premise that “if an individual helps DOJ discover significant corporate or financial misconduct — otherwise unknown to us — then the individual could qualify to receive a portion of the resulting forfeiture.” And they will follow the “basic guardrails” of providing whistleblower rewards:
- Only after all victims have been properly compensated.
- Only to those who submit truthful information not already known to the government.
- Only to those not involved in the criminal activity itself.
- And only in cases where there isn’t an existing financial disclosure incentive — including qui tam or another federal whistleblower program.
As a taste of what is to come, Monaco said the agency will be especially interested in information relating to (i) criminal abuses of the U.S. financial system; (ii) foreign corruption that falls outside the SEC’s jurisdiction, including FCPA violations; and (iii) domestic corruption cases, especially involving corporate payments to government officials for some kind of business advantage.
Two final aspects of the soon-to-be implemented program that Monaco highlighted as prerequisites to any reward are providing information DOJ did not already know and being the “first in the door” with that new information. The False Claims Act has a similar provision with its first-to-file rule which can bar second-in-line whistleblowers from bringing claims under the statute for the same misconduct.
So if it was not already obvious, with this new pilot program DOJ wants to make it especially clear. If you have information on fraud or misconduct, DOJ wants to hear from you! Stay tuned for more details on this pilot program. And in the meantime, if you would like to learn more about the already-existing whistleblower rewards programs, please do not hesitate to contact us. We will connect you with an experienced member of our whistleblower team for a free and confidential consult.