REWARD!
WALLSTREET JOURNAL 8/1/2024
Justice Department Trial Program Offers Millions for Tips on Fraud, Bribery
Officials say program will fill gaps left by awards programs at agencies such as SEC, pointing to settlements involving Binance and Glencore as examples of the type of wrongdoing that other programs don’t cover.
"
‘With this program, we’re doubling down on a proven strategy to ferret out criminal activity that might otherwise go unreported,’ said U.S. Deputy Attorney General Lisa Monaco. Photo: Anna Rose Layden/Getty ImagesThe Justice Department has joined a host of federal agencies that now offer the potential of a big financial payout to tipsters who take on the risk of turning over incriminating information about their employer or another company to the government.
Under a three-year pilot program launched Thursday, people who turn over original information or analysis relating to a financial crime, bribery or healthcare fraud could be eligible for an award of up to 30% of any assets forfeited by a company as a result of that information.
Financial awards for whistleblowers have become common in the U.S., with regulatory agencies such as the U.S. Securities and Exchange Commission and the Internal Revenue Service paying awards in the tens of millions of dollars to tipsters whose disclosures lead to fines and penalties. The SEC’s program was launched in 2010 following a landmark financial overhaul law. The IRS has had the ability to pay whistleblowers since 1867.
Newsletter Sign-up
WSJ | Risk and Compliance Journal
Our Morning Risk Report features insights and news on governance, risk and compliance.
Although a Justice Department-specific program was widely supported by whistleblowers and the lawyers who represent them, the prevalence of such programs caused others to question what the department would add to the mix.
In a call with reporters on Thursday, Justice Department officials said they sought to design a program that fills gaps between pre-existing award programs. They pointed to a $4.3 billion settlement with global cryptocurrency exchange Binance over its failure to register as a money-transmitting business and a $1.2 billion settlement with commodities giant Glencore over foreign bribery violations as examples of cases that other award programs didn’t cover.
Programs at the SEC, IRS and other agencies such as the Commodity Futures Trading Commission are limited in scope, and don’t address the “full range of corporate and financial misconduct that the Justice Department prosecutes,” Deputy Attorney General Lisa Monaco said.
“With this program, we’re doubling down on a proven strategy to ferret out criminal activity that might otherwise go unreported,” Monaco added.
Under the program launched Thursday, a whistleblower is only eligible for an award from the Justice Department if the person isn’t already eligible for an award from another agency.
The program also contains other caveats: Tipsters can’t be meaningfully involved in the misconduct at question, or have obtained the information through their work as a compliance officer or internal auditor of a company.
Certain restrictions placed on the new Justice Department program could cause some whistleblowers to think twice. Ari Yampolsky, a lawyer who represents whistleblowers, said the new program was a welcome development. But he expressed concern that it was only set to last for three years initially and that awards were discretionary.
“The calculus that whistleblowers make is always: Is this worth the risk to my career, to my safety?” Yampolsky said.
The types of misconduct that are eligible for awards include violations of anti-money-laundering regulations that apply to financial institutions. The program also covers bribery of foreign officials, which is prohibited under the U.S. Foreign Corrupt Practices Act.
Those types of corporate misconduct are areas in which the Justice Department has been actively focused on building investigations. The program will also apply to several types of misconduct where officials are looking to step up enforcement. Those include healthcare fraud involving private companies and bribery of U.S. public officials.
The pilot program has been in the works for some time. Monaco first announced that the Justice Department would develop such a program at a legal conference in March, saying the DOJ’s criminal division would work out the specifics during a 90-day “policy sprint.”
In April, the criminal division issued a separate pilot program for employees or executives who are involved in the wrongdoing for which they are blowing the whistle. Under that program, an employee or executive may be eligible for an immunity deal—what is known as a nonprosecution agreement in Justice Department parlance.
Officials said they designed the whistleblower programs to work alongside initiatives that encourage companies to also report wrongdoing.
Under the whistleblower program unveiled Thursday, tipsters that alert their employers to misconduct in addition to reporting to the Justice Department could receive a higher award.
At the same time, companies that disclose a whistleblower report they received internally within 120 days and before being contacted by federal prosecutors will be eligible for leniency under a corporate voluntary disclosure program.
“With very few exceptions, you need to be first in the door,” Monaco said Thursday. “And 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.”
Write to Dylan Tokar at [email protected]
Copyright ©2024 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared in the August 2, 2024, print edition as 'Trial Program Offers Cash For Tips on Fraud, Bribery'.
https://www.wsj.com/articles/justice-department-trial-program-offers-millions-for-tips-on-fraud-bribery-5e4c710d?st=c93ndwf6si2apru&reflink=desktopwebshare_permalink