by Elizabeth E. Hogue, Esq.,
DOJ Says “Knock on Our Door Before We Knock on Yours”
On March 7, 2024, the U.S. Department of Justice (DOJ) announced a new pilot program that includes financial incentives for whistleblowers to report violations. The new pilot program will be launched later this year following a process to develop and implement the pilot, which is expected to take ninety days.
The DOJ likens this new program to “the days of ‘Wanted’ posters across the Old West” in the sense that law enforcement has historically benefited by offering rewards for tips and information. When whistleblowers help the DOJ discover significant misconduct, they may benefit financially from monies recovered.
The goals of the pilot program are to:
- Produce more evidence for successful white-collar criminal prosecutions
- Impose more significant penalties on wrongdoers
- Aid in prosecution of large-scale misconduct
Here are some details:
- The core principle is that when individuals help DOJ identify significant misconduct that is otherwise unknown to DOJ, they may qualify to receive a portion of any resulting recoupments.
- Payments to whistleblowers will be available only when:
- All victims are properly compensated before whistleblowers
- Whistleblowers provide truthful information
- Information provided by whistleblowers is not already known to the DOJ
- Whistleblowers are not involved in criminal activity
- No other relevant financial disclosure incentive exists
The DOJ says that it expects the pilot program to increase the likelihood that employees will decide to report misconduct to the DOJ without first notifying companies that employ them. This result will significantly decrease benefits to companies that decide to self-report because the benefits of self-reporting are available only when the government does not already know about the misconduct. This incentive may produce a race to the DOJ by employers and their employees reminiscent of races to the courthouse.
These incentives also underscore the importance of making it clear in Compliance Programs that employees and contractors are required to report alleged misconduct to their employers/partners first before they tell outside third-parties. Certain woe will come to companies that ignore these allegations or, God forbid, retaliate against potential whistleblowers!
The DOJ and other fraud enforcers are generally enamored with whistleblowers and the information they provide. They are perhaps even more enamored with encouraging companies to self-report.
©2024 Elizabeth E. Hogue, Esq. All rights reserved.
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