It’s On: The DOJ Releases Details About Its New Whistleblower Program

Not to be left out, the Department of Justice (DOJ) is now joining the party. The DOJ’s Corporate Whistleblower Awards Pilot Program launched in 2024 and incentivizes individuals to report corporate crime by rewarding whistleblowers with significant cash awards.

My colleague Walker Newell first covered the announcement of the DOJ’s new whistleblower program in his article, Dialing for Dollars: Taking Stock of the DOJ’s New Whistleblower Program. Since then, new details of the program have emerged.  

DOJ Whistleblower Program: Initial Details

On August 1, 2024, the DOJ released initial guidance and other documents that describe the program. 

Per the program’s fact sheet, the program aims to fill the gaps of pre-existing programs like the False Claims Act qui tam program, SEC Whistleblower Program, Commodity Futures Trading Commission (CFTC) Whistleblower Program, and Financial Crimes Enforcement Network (FinCEN) Whistleblower Program. 

The DOJ will pay whistleblowers awards for providing original, truthful information leading to criminal or civil forfeitures exceeding $1 million. The program is a three-year initiative and will be regularly evaluated for effectiveness. 

In this article, I will give an overview of the DOJ’s whistleblower program and provide an analysis with takeaways. 

Who Is Eligible for the DOJ Whistleblower Program? 

Individuals can qualify for awards if their information leads to criminal or civil forfeitures exceeding $1 million. Not every complaint it eligible, however. The whistleblower's information must relate to one of the following four subject areas to be eligible under the DOJ's program:

1. Financial institution violations, including schemes such as money laundering, violations of anti-money laundering (AML) compliance, fraudulent registration of money-transmitting businesses, and fraud against financial institution regulators. The DOJ is interested in misconduct by financial institutions and/or their insiders or agents. 
2. Foreign corruption and bribery, including international corrupt practices that may violate the Foreign Corrupt Practices Act (FCPA), the Foreign Extortion Prevention Act, and related money laundering statutes. 
3. Domestic bribery and kickbacks, including the payment of bribes or kickbacks by or through companies to domestic public officials, be they federal, state, territorial, or local elected or appointed officials, as well as any government department or agency employees. 
4. Health care-related violations, including crimes related to private or non-public health care benefit programs as well as fraud against patients, investors, and other non-governmental entities within the health care industry. Also included are federal violations related to health care not covered by the Federal False Claims Act. 

Other requirements to note include: 

• Only individual can be whistleblowers, not companies. 
• Individuals cannot be officers or directors of a company who were informed by others of the criminal activity, nor can they be employees involved in a company’s compliance or internal audit functions.
• The information must be non-public, derived from the individual's independent knowledge or analysis, and previously unknown to the DOJ.
• The information cannot have been obtained illegally.
• The information cannot have been obtained under attorney-client privilege (with some exceptions) or through the course of legal representation.
• Information submission must be voluntary and not prompted by government requests.
• Whistleblowers must fully cooperate with DOJ investigations and related legal actions. 
• Information must lead to successful forfeiture of over $1 million in net proceeds for the whistleblower to be eligible for an award. 

Can Whistleblowers Be Anonymous?  

Initially, yes, but only if the whistleblower is represented by an attorney. However, the DOJ reserves the right to require that the whistleblower’s identity be revealed to the DOJ if it deems this “necessary to the prosecution of a case or to meet the Department’s legal obligations, policies, or procedures.” 

The law requires that awards over $500,000 must be reported to Congress, but the whistleblower's identity will remain protected unless necessary.

Having said all of that, the DOJ will definitely want to know the whistleblower’s identity before cutting a check. 

What Else Do I Need to Know About Being a Whistleblower? 

This might be obvious, but just in case: The DOJ has made it clear that someone who “meaningfully participated” in the crime cannot get a financial award under its whistleblower program. The DOJ characterizes this as a stricter standard than the one the SEC uses.

Nevertheless, someone participating in a crime may still want to self-report to the DOJ. Leniency on jail time is a valuable benefit, and the DOJ weighs things like cooperation heavily when making prosecution deals. In some cases, a non-prosecution agreement might even be available.

Finally, for those who like to cry wolf: The DOJ can permanently bar individuals who submit frivolous or fraudulent claims. 

How Does the DOJ Determine Whistleblower Rewards?  

The DOJ’s whistleblower program award is a percentage of the amount of civil or criminal forfeiture obtained by the DOJ as a result of the whistleblower’s information—but only after restitution has first been made to all the victims of the crime.

By contrast, the SEC’s whistleblower program is a more straightforward in that the SEC award is a percentage of sanctions imposed by the SEC.

Some additional factors influencing the DOJ's award amounts include the following: 

• Amount of award: Whistleblowers may receive up to 30% of the first $100 million in net proceeds forfeited, with diminishing percentages for amounts above that threshold. No awards are given for forfeitures above $500 million. 
• Award determination: The DOJ may increase or decrease awards based on the significance of information, the whistleblower's cooperation, and other factors like culpability or delays in reporting. In its guidance, the DOJ also notes that “[a]wards are issued in the Department’s sole discretion.” 

Key Insights and Practical Implications  

The DOJ’s whistleblower program is yet another avenue for tippers to report corporate crime, which is obviously a good thing—illegal acts are illegal for a reason.

However, with all the carrots now dangling in front of potential tippers, corporations should consider strengthening their own internal whistleblowing programs—a first line of defense for addressing misconduct. 

The key is to encourage individuals to mention issues while they are still small and easily corrected.

To the DOJ’s credit, its whistleblower program in fact encourages internal reporting. The program does this in two ways. First, an individual who reports information internally can still be considered for the DOJ’s whistleblower program by reporting to the DOJ within 120 days of the internal report. In addition, the use of internal reporting can be a factor that increases a whistleblower’s award. 

Employers also need to ensure that employees can report issues without fear of retaliation, something the DOJ takes very seriously. The DOJ considers retaliation against whistleblowers when assessing corporate cooperation. 

Whistleblowers must be able to communicate directly with the DOJ without employer consent, and interference with this process can impact a company's cooperation credit. For clarity, the DOJ notes in its fact sheet: 

I have written in past on the topic of having effective internal whistleblower programs. You can see my article on the SEC’s whistleblowing program for more tips on effective internal compliance, including the following: 

• Review current whistleblower policies.
• Make sure hotlines are working. 
• Ensure responses to whistleblowers are timely. 
• Establish the tone at the top, and then educate, educate, educate. 

Finally, the importance of a good D&O insurance program supplemented by solid indemnification agreements cannot be overstated. These are what help protect directors and officers financially if they find themselves in a government investigation for corporate crime.