On April 15, 2024, the Department of Justice (“DOJ”) released an internal memo introducing a Pilot Program on Voluntary Disclosures intended to encourage individuals – from executives to lower-level employees – to report corporate criminal misconduct. This Pilot Program aims to provide discretionary grants of immunity and non-prosection agreements (“NPAs”) to individuals who disclose actionable, original information about corporate criminal misconduct and fully cooperate with law enforcement authorities. The Pilot Program is designed to incentivize individuals to come forward with actionable information that may otherwise go undetected, thereby helping to uncover and prevent corporate and white-collar criminal offenses.

Similar to the Whistleblower Program the DOJ announced in March of this year, the Pilot Program has two objectives: first, to receive information from disclosures about potential misconduct, and second, to incentivize investments into companies’ compliance programs to help prevent, detect, and remediate misconduct. However, unlike the Whistleblower Program, which offers monetary awards exclusively to individuals who are not involved in the criminal activity, the Pilot Program offers immunity and NPAs to individuals who are witnesses to or involved in corporate misconduct. In any event, the DOJ’s message is clear: call us before we call you.

Although the use of cooperating witnesses in investigations and prosecutions, discretionary grants of immunity, and entry into NPAs in return for cooperation have long been a part of the federal criminal system, the Pilot Program provides more transparency regarding circumstances in which Criminal Division prosecutors may offer NPAs:

  1. Original Information. The reporting individual must disclose original information, meaning non-public information not previously known to the Criminal Division or to any component of the DOJ, and the information provided must relate to at least one of the following:
    • Violations by financial institutions, their insiders, or agents, including schemes involving money laundering, anti-money laundering, registration of money transmitting businesses, and fraud statutes, and fraud against or compliance with financial institution regulators;
    • Violations related to integrity or financial markets undertaken (1) by financial institutions, investment advisors, or investment funds, (2) by or through public companies or private companies with 50 or more employees, or (3) by any insiders or agents of such entities;
    • Violations related to foreign corruption and bribery by, through, or related to public or private companies, including violations of the Foreign Corrupt Practices Act (“FCPA”), violations of the Foreign Extortion Prevention Act (“FEPA”), and violations of the money laundering statutes;
    • Violations related to health care fraud or illegal health care kickbacks committed by or through public companies or private companies with 50 or more employees;
    • Violations by or through public or private companies with 50 or more employees related to fraud against, or the deception of, the United States in connection with federally funded contracting, where such fraud does not involve health care or illegal health care kickbacks; and
    • Violations committed by or through public or private companies related to the payment of bribes or kickbacks to domestic public officials.
  2. Voluntary Disclosure. The disclosure must be voluntary, meaning it is made (1) before any request, inquiry, or demand is directed at an individual by the DOJ or other government agencies; (2) where the individual has no preexisting obligation to report the information to the DOJ or other government agencies; and (3) in the absence of any government investigation or threat of imminent disclosure to the government or the public.
  3. Truthful and Complete Disclosure. The disclosure must be truthful and complete, including all information known to the individual about any misconduct in which they have participated or are aware of.
  4. Full Cooperation. The reporting individual must agree to fully cooperate with and be willing and able to provide substantial assistance to the DOJ in its investigation of related conduct and prosecution of equally or more culpable individuals or entities. Specifically, individuals will be expected to provide truthful testimony, produce documents, and work in a proactive manner with law enforcement officers and agents.
  5. Forfeiture or Disgorgement. The reporting individual must agree to forfeit or disgorge any profit from the criminal wrongdoing and pay restitution or victim compensation.
  6. Eligibility Restrictions. The Pilot Program outlines specific eligibility restrictions. For example, individuals who engaged in criminal conduct involving violence, sex offenses, or terrorism, or who held certain high-ranking positions (e.g., Chief Executive Officer or Chief Financial Officer) in a company, may not be eligible for an NPA. Similarly, the organizer/leader of the reported scheme may not be eligible for an NPA. Finally, individuals who have previous felony convictions or any conviction of any kind involving fraud or dishonesty may not be eligible for an NPA.

The Pilot Program applies to disclosures made on or after April 15, 2024, and the Criminal Division will collect anonymized statistical data about relevant disclosures in order to determine whether to extend, modify, or end the Pilot Program.  In accordance with existing DOJ procedures, Criminal Division prosecutors retain discretion to offer NPAs to individuals in appropriate circumstances, including where individuals disclose information under the Pilot Program, but the criteria above are not fully met.

The Department of Justice continues to demonstrate its commitment to investigating and prosecuting federal criminal offenses, specifically pertaining to corporate misconduct, by establishing programs and incentives that encourage the disclosure of crimes committed by corporations and their employees. Through this Pilot Program, the DOJ seeks to incentivize cooperation and transparency among corporate employees, ultimately bolstering its ongoing efforts to combat financial misconduct and uphold corporate integrity.

Cranfill Sumner’s White Collar, Government Investigations and Special Matters Practice Group has extensive experience representing whistleblowers and qui tam relators. We encourage any potential whistleblower to seek advice of experienced and competent counsel prior to contacting the authorities or making any statements to any government agencies.