New DOJ whistleblowers program is now live, but how does it differ from the others?

The successes of whistleblower programs run by the SEC, CTFC, FinCEN, and the IRS has prompted the Department of Justice to launch its own.

The Corporate Whistleblower Awards Pilot Program went live Thursday (August 1) enabling whistleblowers to submit information about several types of financial and corporate crime via the DOJ website and seeking original information about corporate misconduct not covered by other programs.

“With this program we’re doubling down on a proven strategy to ferret out criminal activity that might otherwise go unreported,” said Deputy Attorney General Lisa Monaco during a speech in Washington, DC.

It will initially focus on four key areas:

1. certain crimes involving financial institutions and their employees
2. foreign corruption involving privately held companies and others that are not issuers of US securities
3. domestic corruption involving companies
4. health care fraud schemes targeting private insurers not subject to qui tam recovery under the False Claims Act.

Monaco says that programs operated by the SEC and CTFC are limited in their scope: “They only cover misconduct within those agencies’ jurisdictions. The same is true for similar programs run by the IRS and FinCEN. And qui tam actions, which offer their own whistleblowing incentives, are available only for fraud against the government,” she explained during a speech in Washington, DC.

There are differences and similarities between the DOJ program and that of the SEC, as former Chief of the Office of the Whistleblower at the SEC, Jane Norberg, now a partner at law firm Arnold & Porter, told InvestmentNews.

“The DOJ modeled much of their program after the SEC’s whistleblower program, right down to the graphic on their website depicting ‘The Whistleblower Process” from tip submission to award,” she said.

However, one major difference pointed out by Norberg is that the company must contact the DOJ within 120 days of the company’s receipt of an internal whistleblower tip in order to be eligible for the presumption of a declination.

“Depending on the nature of the investigation, this timeline puts immense pressure on companies to conduct an internal investigation and make a decision to contact the DOJ in a relatively short period of time,” she said. “This 120-day race also puts pressure on ensuring proper training for employees, managers and board on internal reporting channels at the company so that the appropriate parties get the information quickly to begin the investigation.”

The DOJ’s Criminal Division will collaborate with the FBI on investigations.

CARROT AND STICK

Lisa Monaco stated in her speech that there would be a carrot and stick approach to the program with those companies that come forward when they discover wrongdoing by individuals, with benefits of such voluntary disclosure. But she also warned against trying to hide misconduct.

She added that the combination of incentives for whistleblowers – anonymity while potentially receiving a significant dollar reward based on the financial penalties imposed – together with benefits for companies will accelerate reporting.

“…when everyone needs to be first in the door, no one wants to be second. Suddenly everyone is racing up the front steps, all hoping they’re the first to knock,” she said.

Similar to the SEC, the DOJ notes that it can bring action against a company for retaliation or obstruction of a whistleblower and it is likely to use this power, Jane Norberg told InvestmentNews.  

“The DOJ specifically mentions that confidentiality provisions could be viewed as obstructing communications with the DOJ,” she explained. “The SEC has actively pursued charges against companies for impeding reporting through the use of confidentiality and non-disparagement provisions that do not include appropriate government reporting provisions.  I anticipate the DOJ will also pursue these types of charges to strengthen the program.”