On April 15, 2024, the Department of Justice (DOJ) criminal division announced a new pilot program designed to reward individuals with non-prosecution agreements (NPAs) who voluntarily self-disclose "actionable, original information" regarding a corporation's "criminal conduct that might otherwise go undetected or be impossible to prove."[1] The DOJ's release comes on the heels of Deputy Attorney General Lisa Monaco's March 7, 2024 announcement, detailing DOJ's forthcoming whistleblower rewards program for civil and criminal forfeitures.[2] Both programs provide incentives for individuals to report misconduct directly to the DOJ first (for pecuniary and/or self-preservation purposes) instead of first utilizing a company's internal reporting channels. Companies should therefore be aware that self-reporting might be a race against their own employees for voluntary self-disclosure (VSD) credit.
Pilot Program Criteria
The NPA pilot program provides an NPA to an individual who satisfies all of the following criteria.
Provision of Material Non-Public Information Regarding Qualifying Offenses
- First, the individual must provide material, non-public information relating to one of the provided categories of qualifying offenses, specifically: (1) money laundering and related fraud/compliance offenses; (2) violations related to the integrity of financial markets; (3) foreign corruption and bribery; (4) healthcare fraud and illegal kickbacks; (5) fraud related to federally funded contracting; and (6) domestic bribery.[3]
Information Disclosed Prior to Any Government Inquiry or Threat of Imminent Disclosure
- Second, the individual must provide the information voluntarily, which is defined as being provided before any government inquiry or request has been made regarding the subject matter of the submission.[4] Only disclosures that were made in the absence of any government investigation, the threat of imminent disclosure, or preexisting reporting requirements will qualify for the NPA pilot program.
Truthful and Complete Disclosure
- Third, the disclosure must be truthful and complete, including all information known to the individual, including the complete extent of the individual's own role in the misconduct. The individual must also fully cooperate and disclose all information about any further matters about which the DOJ may inquire.[5]
Must Provide "Substantial Assistance" Against Those at Same Level of Culpability or Greater
- Fourth, the individual must provide substantial assistance in the investigation and prosecution of at least one individual or entity that is as culpable as or more culpable than themselves.[6]
Forfeiture and Disgorgement of Proceeds
- Finally, the individual must forfeit and disgorge any profits received from their role, if any, in the criminal wrongdoing and pay restitution if necessary.[7]
Even if the criteria above are not met in full, DOJ prosecutors retain discretion to offer NPAs to individuals in appropriate circumstances.[8] Relatedly, it would appear that prosecutors also retain discretion to decide whether an individual's assistance was "substantial" enough to warrant participation in the program.
Notably, the NPA pilot program will not provide an NPA to an individual, even if they satisfy all of the above criteria, if the individual: (1) is the CEO or CFO of the corporate entity; (2) was the organizer or leader of the scheme; (3) engaged in violent criminal conduct; (4) is a domestic government official; or (5) has felony convictions or convictions for crimes involving fraud or dishonesty.[9]
Key Differences Between the DOJ NPA Pilot Program and the SDNY Whistleblower Program
While the NPA pilot program supplements existing DOJ district-level and other enforcement agency whistleblower programs, there are a few key differences.
For example, the NPA pilot program applies to a broad range of federal offenses, as compared with the whistleblower program recently launched by the Southern District of New York, which only covers fraud, corporate control failures, and a small subset of bribery cases.[10] Additionally, while the NPA program excludes only certain C-level executives, scheme leaders/organizers, and public officials from participation, the SDNY program excludes anyone of "major public interest."[11] The NPA pilot program also expressly requires forfeiture.[12]
Conclusion
By offering an NPA to individuals who play a role in the underlying criminal misconduct, the NPA pilot program encourages a race to the DOJ to be first in line for VSD credit. The employee involved in criminal misconduct will want to be first in order to stave off prosecution, while the employee who inadvertently discovers criminal misconduct by others will want to be first and ensure their share of the forfeiture prize, leaving the unknowing company behind, having lost the race it likely never knew had started.
Thus, with the rise of DOJ whistleblower programs—working in conjunction with whistleblower programs at other enforcement authorities (e.g., SEC, CFTC)—companies should review and update their internal controls to detect wrongdoing; their whistleblower policies and procedures, including any potential rewards for internal reporting; and their non-retaliation policies. Companies should also be aware that conducting an internal investigation and interviewing employees before filing a VSD might trigger implicated individuals to report what they know to the DOJ in an effort to secure an NPA.
Companies should also promptly identify all allegations of misconduct as they are uncovered and consult with outside counsel to consider investigation strategy and the pros and cons of voluntary self-disclosure, given the likely increased risk of whistleblowers bringing allegations of misconduct directly to DOJ.
[1] DOJ Memorandum: "The Criminal Division's Pilot Program on Voluntary Self-Disclosures for Individuals" (Apr. 15, 2024), https://www.justice.gov/criminal/media/1347991/dl?inline.
[2] Deputy Attorney General Lisa Monaco Delivers Keynote Remarks at the American Bar Association's 39th National Institute on White Collar Crime.
[3] DOJ Memorandum: "The Criminal Division's Pilot Program on Voluntary Self-Disclosures for Individuals" (Apr. 15, 2024), https://www.justice.gov/criminal/media/1347991/dl?inline.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id.
[10] SDNY Whistleblower Pilot Program, effective Feb. 13, 2024, https://www.justice.gov/d9/2024-02/sdny_wb_policy_effective_2-13-24.pdf.
[11] Id.
[12] DOJ Memorandum: "The Criminal Division's Pilot Program on Voluntary Self-Disclosures for Individuals" (Apr. 15, 2024), https://www.justice.gov/criminal/media/1347991/dl?inline.