On September 17, 2024, Deputy Assistant Attorney General Nicole Argentieri stressed the intense focus placed by the U.S. Department of Justice (DOJ or the Department) on incentivizing companies to maintain healthy corporate compliance programs – and highlighted key aspects of the Department’s newest enforcement tool. Speaking at the NYU School of Law’s Program on Corporate Compliance and Enforcement, Argentieri emphasized the DOJ Criminal Division’s newly rolled out Corporate Whistleblower Awards Pilot Program, which offers monetary rewards for whistleblowers who provide information about certain corporate misconduct that results in a successful criminal or civil forfeiture of more than $1 million.
As described below, Argentieri underscored key aspects of the three-year pilot program, and the message DOJ intends to send to corporate executives and leadership teams.
DOJ is filling gaps among existing whistleblower programs.
Argentieri acknowledged the success of whistleblower programs managed by other agencies—including the SEC, CFTC, IRS, and FinCEN—which have paid out hundreds of millions of dollars in awards for tips that helped hold responsible parties accountable for their misconduct. With the Corporate Whistleblower Awards Pilot Program, DOJ seeks to fill gaps not covered by those programs or by statutory initiatives such as qui tam actions.
DOJ signals enforcement priorities.
To be eligible for a reward under the pilot program, a whistleblower must provide original and truthful information that relates to one of four subject-matter areas: (1) certain crimes involving financial institutions (ranging from traditional banks to cryptocurrency businesses) and their employees; (2) foreign corruption involving companies; (3) domestic corruption involving companies; or (4) health care fraud schemes targeting private insurers.
Argentieri called financial institutions “the first defense against illicit finance,” encouraging whistleblowers to report financial misconduct not covered by other agencies’ programs. Among other examples, Argentieri discussed the Department’s case against Binance as one type of financial crime that would be covered under the Corporate Whistleblower Awards Pilot Program. Binance, a cryptocurrency exchange business, failed to register with U.S. financial regulators despite doing business in the United States.
Argentieri recognized that the SEC’s existing whistleblower program covers some foreign corruption cases. But the Department’s pilot program will expand to capture others, such as those involving bribery at international commodity trading companies (which resulted in over $1.7 billion in financial penalties since 2017). Argentieri also noted that the pilot program’s focus on foreign corruption will help further DOJ’s objective to “vigorously enforce” the recently enacted Foreign Extortion Prevention Act.
Argentieri indicated that DOJ seeks to expand its corporate enforcement efforts related to domestic corruption and private health care fraud. Regarding domestic corruption, a whistleblower might provide the Department information about a company, through its employees or agents, bribing a government official to win a contract. Regarding health care fraud, the Criminal Division seeks to fill a gap left open by the qui tam whistleblower provisions of the False Claims Act (FCA), which imposes liability only for fraud perpetrated against federal payers such as Medicare and Medicaid. Through the pilot program, DOJ seeks information about federal health care crimes involving private payers, fraud against patients, investors, and any other non-governmental entities in the health care industry, and any other violations involving conduct related to health care not covered by the FCA.
DOJ continues to encourage companies to invest in compliance and self-report.
In addition to encouraging whistleblowers to come forward, Argentieri also discussed the Department’s effort to incentivize companies to “invest in strong internal reporting structures and to report crime when they learn about it.” To that end, DOJ amended its Corporate Enforcement and Voluntary Self-Disclosure Policy in tandem with the pilot whistleblower program.
Now, when a company receives an internal report of misconduct, if the company self-reports to the Department within 120 days (and before the Department contacts the company regarding the same report), the company could be eligible for a presumption of declination. The company could qualify for a presumption of declination even if the whistleblower had already reported to DOJ. And a whistleblower who reports internally before going to the Department could be eligible for an increased award. In other words, the Corporate Whistleblower Awards Pilot Program allows a 120-day window in which both whistleblowers and companies can report the same misconduct and remain eligible for their respective potential benefits.
DOJ commits to protecting whistleblower confidentiality.
Argentieri discussed the fear of retaliation that whistleblowers can face and the Department’s commitment to protecting the identities of whistleblowers “to the fullest extent allowable under law.” Argentieri warned that companies who retaliate against whistleblowers will “lose credit for cooperation and remediation” and may face harsher sentences and even obstruction of justice charges.
Argentieri concluded her remarks by emphasizing the Criminal Division’s top priority of “holding culpable individuals accountable for their criminal acts.” Through the new whistleblower program and the amended self-disclosure policy, DOJ aims to incentivize whistleblowers to report a broader scope of information and companies to bolster internal compliance controls to expose criminal conduct. And when a company detects misconduct, Argentieri advised corporations to “call us before we call you.”
McGuireWoods Insights
The DOJ’s new whistleblower program and amended voluntary self-disclosure policy demonstrate the importance of effective internal reporting processes and prompt internal investigations. By allowing both companies and whistleblowers to reap benefits from reporting—and considering internal reports as a factor that could increase a whistleblower’s award—Argentieri acknowledged that the program was designed to incentivize use of internal reporting procedures and reports to the Department. Given the potential for financial reward, companies should anticipate increased activity both internally and externally—from internal reports to whistleblower reporting, investigations, and enforcement measures.
Proactive investment in compliance controls comes with significant corporate benefit through the Department’s offer of a presumption of declination in exchange for prompt voluntary self-disclosure. Simple measures—including ensuring that employees understand how to report misconduct internally, feel comfortable reporting and without fear of retaliation, and have an option to report anonymously—will best position companies to reap the benefit of the pilot program.
More broadly, the pilot program underscores once again DOJ’s expectation that companies invest in robust, well-resourced compliance programs that can prevent criminal activity and allow detection and remediation of misconduct when it occurs. Argentieri’s recent remarks emphasized many of the core principles included in DOJ’s Evaluation of Corporate Compliance Programs guidance, including hiring and empowering capable compliance personnel and incorporating compliance considerations into compensation structures and consequence management procedures. Now more than ever, maintaining an effective compliance program and strong culture of compliance will help companies detect misconduct before DOJ comes knocking.
When DOJ first announced the pilot whistleblower program in March 2024, McGuireWoods noted its particular significance for privately held companies and foreign entities. McGuireWoods will continue to monitor and report on the Department’s use of its newest enforcement tool, and stands ready to assist clients in auditing and enhancing their corporate compliance programs.