On August 1, 2024, the Department of Justice (“DOJ”) announced the launch of its three-year Corporate Whistleblower Awards Pilot Program (the “Pilot Program”). The Pilot Program intends to fill gaps left by comparable programs run by the Securities and Exchange Commission (“SEC”), Commodity Futures Trading Commission (“CFTC”), and Financial Crimes Enforcement Network (“FinCEN”), and will allow whistleblowers to submit information about certain types of previously undetected misconduct. If that information leads to a successful prosecution resulting in asset forfeiture, the whistleblower may receive some portion of that forfeiture under 28 U.S.C. § 524(c).

The Pilot Program has several specifications for who may be rewarded for submitting information and the information which warrants a reward. Among other specifications, the whistleblower must be an individual who did not “meaningfully participate” in the criminal activity being reported. Qualifying reported information must be original, non-public, true, complete, and related to: (1) money laundering or fraud violations concerning financial institutions; (2) foreign corruption and bribery; (3) kickbacks or bribery related to domestic public officials; or (4) certain federal health care offenses and fraud directed at non-governmental entities. The Pilot Program also contains certain protections if whistleblowers obtain their tips improperly, such as through their role as an attorney, auditor, or internal investigator for the company. The submissions must be voluntary and the whistleblowers must cooperate with the DOJ in any related investigation. 

The DOJ assesses the amount of each award individually, considering a wide range of factors, including the importance of the information provided the whistleblower’s participation in internal reporting mechanisms, the whistleblower’s own culpability in the reported violations, and any unreasonable delay by the whistleblower. A tip leading to a successful prosecution culminating in asset forfeiture could net the whistleblower up to 30% for the first $100 million forfeited, and up to 5% for any additional amount forfeited up to $500 million, with individual victims of the reported scheme receiving priority in the repayment waterfall over whistleblowers.

The Pilot Program also allows for a brief period for companies to cooperate with the DOJ. If a company receives an internal report from a whistleblower and discloses the allegations to the DOJ’s Criminal Division prior to 120 days from receiving the report and before the DOJ contacts the company about the report, the company remains eligible for the Voluntary Self-Disclosure (“VSD”) program, through which the company may receive potential benefits, such as a non-prosecution agreement. This further incentivizes companies to conduct an internal investigation immediately upon receiving a complaint..

The Pilot Program comes as the latest effort in DOJ’s push to encourage whistleblowers and corporate self-reporting. In February 2024, the United States Attorney for the Southern District of New York enacted a policy offering non-prosecution agreements to certain whistleblowers, with the United States Attorney for the Northern District of California following up with a similar program in March 2024. Time will tell if the Pilot Program will find the same success as the SEC’s comparable program, which awarded 68 individual whistleblowers nearly $600 million in 2023.