Justice Dept. Launches Whistleblower Program

The Justice Department is climbing aboard the whistleblower awards bandwagon, with a new program it plans to launch later this year offering monetary awards to whistleblowers akin to what numerous other federal agencies already do.

Deputy attorney general Lisa Monaco made the announcement Thursday while speaking to the American Bar Association’s white-collar crime conference in San Francisco. The Justice Department “recognized there’s another way we can encourage individuals to report misconduct: by rewarding whistleblowers,” Monaco said in a speech. “And how do we do that? Money.”

The U.S. attorney general already has statutory authority to pay awards for information or assistance leading to civil or criminal forfeitures, much like federal authorities posting Wanted posters for criminals in the 1800s (an example Monaco cited in her speech). Previously, however, “we’ve used this authority here and there — but never as part of a targeted program,” she said. “Now’s the time to expand our use of this tool in corporate misconduct cases and apply it to reward whistleblowing.”

To that end, the Justice Department has launched a “90-day sprint” to develop and implement a pilot program, with a formal start date later this year. If a person helps the department discover significant corporate or financial misconduct, then that person could qualify to receive a portion of the resulting settlement.

As always when lawyers are involved, the program does have some caveats. Whistleblowers would only be eligible for awards when:

• All victims have been properly compensated;
• The whistleblower is not involved in the criminal conduct itself;
• The whistleblower submits truthful information not already known to the government; and
• There are no other existing financial disclosure programs, such as qui tam lawsuits or another federal whistleblower program.

That is, if the whistleblower is reporting some sort of investor fraud, then he or she will be shipped off to the Securities and Exchange Commission’s whistleblower program. Ditto for reporting tax violations (off to the IRS), money laundering (to FinCEN) and so forth. If the whistleblower is reporting a violation of the False Claims Act, then he or she might need to pursue a qui tam lawsuit and hope for an award if that lawsuit results in damages. 

Despite those existing whistleblower programs, however, “they simply don’t address the full range of corporate and financial misconduct that the department prosecutes,” Monaco said. “So we are filling these gaps.”

Are Compliance Officers Eligible for This?

That’s a good question. Monaco did not expressly say that compliance officers are, and she did promise that more details will be forthcoming later this week. But she also gave examples that suggest compliance officers (and internal auditors and other gatekeepers) will be eligible: 

Maybe you work — or your client does — at a fast-growing private startup here in the Bay Area, and you discover the company’s been paying bribes to get regulatory approvals and doctoring the books to hide the payments. If you come forward, you could get paid as part of the recovery from that criminal case.

Monaco said that to a room full of lawyers. She is no stranger to corporate compliance programs and how Justice Department policy might nurture those programs. So I’m hard-pressed to believe she would say all that by mistake or without understanding who was in the room listening to her.

We should remember that corporate compliance officers already can seek whistleblower awards from the SEC, but only if they first try to raise their concerns internally and management ignores you. On the other hand, we also have the Anti-Money Laundering Act of 2020, which established a whistleblower awards program that didn’t first require compliance officers to report internally.

And regardless of any eligibility compliance officers might have themselves, you also have a day job managing whistleblower hotlines and internal reports from the rest of the enterprise. This latest awards program is yet another temptation for would-be whistleblowers not to report their concerns to you first, but rather run directly to Uncle Sam with the hope that their whistleblower report will make them rich. 

Then again, if the job weren’t so challenging, you wouldn’t be making the big bucks, would you?