The pilot program, entitled “Pilot Program on Voluntary Self-Disclosures for Individuals,” increases transparency regarding the circumstances under which prosecutors will offer leniency to cooperating witnesses and other individuals through use of a non-prosecution agreement (NPA) when they report potential criminal misconduct involving corporations.
Quick Hits
- The DOJ launched a new pilot program that will allow individuals who report certain criminal conduct to federal authorities to avoid prosecution under certain circumstances.
- The pilot program is the latest expansion by the DOJ of its whistleblower and voluntary self-disclosure program.
- The pilot program applies to criminal conduct that occurred on or after April 15, 2024.
The program incentivizes individual actors to disclose to federal authorities “actionable, original information about criminal conduct that might otherwise go undetected or be impossible to prove.” Reporting individuals must provide full cooperation, including payment of applicable victim compensation, restitution, forfeiture, or disgorgement, “including returning any ill-gotten gains.”
Covered Criminal Conduct
The pilot program applies to reporting of certain criminal conduct involving corporations, including: violations by financial institutions such as money laundering, fraud, or fraudulent noncompliance with financial regulations; foreign corruption and bribery, including violations of the Foreign Corrupt Practices Act (FCPA) or the Foreign Extortion Prevention Act; healthcare fraud or illegal kickbacks; fraud in government contracting by companies with fifty or more employees; and bribes or kickbacks to domestic public officials.
Non-Prosecution Criteria
The pilot program sets forth the following criteria for an individual to be eligible for an NPA:
- Original Information—The reporting individual’s disclosure must pertain to new, nonpublic information not already known by the DOJ or federal law enforcement.
- Voluntary—The disclosure must be made “before any request, inquiry, or demand,” when there is no “preexisting obligation” to report, and while there is no government investigation.
- Truthful and Complete—The disclosure must include all information known by the individual making the report.
- Full Cooperation—“The reporting individual must agree to fully cooperate with and be willing and able to provide substantial assistance.” (Emphasis in the original.)
- Forfeiture—“The reporting individual must agree to forfeit or disgorge any profit from the criminal wrongdoing and pay restitution or victim compensation.”
Ineligibility
Individuals who are in the position of chief executive officer (CEO) or chief financial officer of the companies involved are not eligible for an NPA under the program, nor are individuals who were the organizers or leaders of the criminal scheme. The program also does not apply to appointed or elected public officials of domestic offices “at any level,” including members of law enforcement. Further, to be eligible for an NPA, individuals must not have a prior conviction for a felony or any crime involving fraud or dishonesty.
DOJ Whistleblower Program
The new pilot program is the latest in the DOJ’s ongoing effort to broaden its whistleblower program and incentivize voluntary self-disclosure of potential criminal conduct. In March 2024, the DOJ announced it is developing a new pilot program to offer monetary awards to whistleblowers who provide information on serious financial crimes and foreign and domestic corruption.
The DOJ is also focused on expanding its voluntary self-disclosure program for corporations. The department recently codified its new “Mergers & Acquisitions Safe Harbor Policy” in the Justice Manual. That program will offer acquiring companies in a merger deal a presumption of declination to prosecute if they disclose criminal misconduct that occurred at the company being acquired that is discovered during the due diligence process. That policy comes after the DOJ in February 2023 revised national standards for when companies may be considered to have made a voluntary self-disclosure (VSD) of misconduct to federal prosecutors that may enable companies to limit potential criminal liability.
Next Steps
The DOJ’s new policies could increase the likelihood that employees will go directly to federal authorities before reporting such misconduct internally and may also potentially increase an employers’ potential liability. As such, employers may want to ensure they have up-to-date compliance policies, as well as whistleblower protections and investigation procedures that encourage the prompt discovery of any potential misconduct.
Ogletree Deakins’ Ethics Compliance and Whistleblower Practice Group and Workplace Investigations and Organizational Assessments Practice Group will continue to monitor developments and will post updates to the firm’s Ethics / Whistleblower and Workplace Investigations and Organizational Assessments blogs as additional information becomes available.
Follow and Subscribe
LinkedIn | Instagram | Webinars | Podcasts
“Ogletree Deakins has experienced professionals in all areas of labour and employment law who provide efficient, client-focused service. We represent employers of all industries and sizes, from small businesses to Fortune 50 companies.”
Please visit the firm link to site
