On March 7, 2024, Deputy Attorney General Lisa Monaco announced that the U.S. Department of Justice (“DOJ”) is creating a pilot whistleblower rewards program, which will be developed and implemented over the next 90 days, with a formal start date to be announced later in 2024.

According to the announcement, individuals who assist the DOJ in “discover[ing] significant corporate or financial misconduct” could be eligible under the program to receive a portion of any resulting forfeiture.  The stated goals of the program are to “create new incentives for individuals to report misconduct to the [DOJ]” and “drive companies to invest further in their own internal compliance and reporting systems.” 

As a reminder, the DOJ has statutory authority under 28 U.S.C. § 524 (c)(1)(C) to pay awards for “information or assistance leading to a civil or criminal forfeiture.”  As frequently discussed on this blog, other federal agencies, such as the SEC and CFTC, have implemented similar whistleblower rewards programs, and we have reported on several enormous awards handed out under those programs, including a record-shattering $279 million award announced last year.  The announcement noted that the DOJ’s program is designed to improve upon and supplement this “patchwork quilt” of initiatives.

While the details of the program will be sorted out in the coming months, the announcement laid out some “basic guardrails.”  Specifically, the DOJ would only offer payments to whistleblowers:

  • (i) after all victims have been compensated properly;
  • (ii) to individuals who submit truthful information that is not already known to the government;
  • (iii) to individuals who are not themselves involved in the alleged criminal activity; and
  • (iv) in cases where there is not “an existing financial disclosure incentive,” which includes qui tam or other federal whistleblower programs.

The DOJ made clear to potential whistleblowers that it will accept information about violations of all federal laws, but would be particularly interested in targeting violations related to “[c]riminal abuses of the U.S. financial system,” “[f]oreign corruption cases outside the jurisdiction of the SEC, including FCPA violations by non-issuers and violations of the recently enacted Foreign Extortion Prevention Act,” and “[d]omestic corruption cases, especially involving illegal corporate payments to government officials.”

The next day, on March 8, 2024, Acting Assistant Attorney General Nicole Argentieri discussed the initiative in greater detail.  Argentieri stated that the DOJ’s Money Laundering and Asset Recovery Section (“MLARS”) would be partnering closely with U.S. Attorneys, the FBI and other DOJ offices to develop guidelines for the program.  Argentieri also reiterated that the DOJ anticipates the program will be useful in “developing foreign corruption cases that are outside the jurisdiction of the SEC, including FCPA violations by non-issuers.”  As another possible guardrail, Argentieri added that the DOJ expects to establish a monetary threshold to be eligible for rewards under the program, which could be similar to the current threshold in the SEC and CFTC whistleblower programs of at least a $1 million agency sanctions order.

Takeaways

With this announcement, the DOJ is giving whistleblowers strong incentives to disclose potential violations of federal law as early as possible, so as to be eligible for rewards under the soon-to-be implemented program.  Based on the DOJ’s statements on what sorts of violations it will focus on, we anticipate seeing a rise in federal prosecutions under various laws over the next few years that do not fall under the more limited jurisdiction of the SEC or CFTC.  As always, we will monitor this important development and report on any updates.

Posted in DOJ, Whistleblower
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Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Restrictive Covenant & Trade Secret, and Whistleblower…

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Restrictive Covenant & Trade Secret, and Whistleblower Practice. Steven’s national practice focuses on defending companies in federal and state courts and in arbitration fora against the full spectrum of employment-related claims, including claims of executives; restrictive covenant violations; employee raiding; theft of trade secrets; whistleblower retaliation under the Sarbanes-Oxley Act, the Dodd-Frank Act and similar state laws; and wage-and-hour violations, including class, collective and PAGA actions.

Steven has successfully handled trials in multiple jurisdictions; prevailed in seeking and defending against applications for temporary restraining orders and preliminary injunctions; defended one of the largest Illinois-only class actions in the history of the federal courts in Illinois (over 90k putative class members); and prevailed following his oral arguments before federal and state appellate courts. He brings his litigation experience (beginning in 1998) to bear in counseling clients to minimize risk and avoid or prepare for success in litigation.

Investigations. Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has the unusual experience of testifying in federal court in connection with investigations. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Thought Leadership and Accolades. Steven was named Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers. Chambers has reported:

  • Steven is “one of the best in the country and has a lot of experience”;
  • Steven is as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field”;
  • He is thoughtful, attentive and demonstrates an acute understanding of matters top of mind for business-minded general counsel; and
  • “He is someone who can navigate the twists and turns of litigation without difficulty.”

Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a ”Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a U.S. Library of Congress Burton Award Winner for “Distinguished Legal Writing.”

Steven was appointed to Law360’s Employment Editorial Advisory Board and selected as a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is often quoted in leading publications such as The Wall Street Journal. The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal.

In 2024, Steven received the Excellence in Pro Bono Service Award from the United States District Court for the Northern District of Illinois and the Chicago Chapter of the Federal Bar Association.

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