The Department of Justice (DOJ) launched a new pilot program that encourages voluntary self-disclosure by corporate executives who are themselves involved in financial misconduct, with the incentive of a nonprosecution agreement (NPA) for those who help an agency investigation.
The pilot program, unveiled Monday, aims to offer a “strong incentive” for executives involved in financial misconduct to provide to the DOJ “actionable, original information about criminal conduct that might otherwise go undetected or be impossible to prove.”
The program offers potential whistleblowers a new method for revealing wrongdoing related to fraud, money laundering, market manipulation, foreign corruption and bribery, healthcare fraud and illegal kickbacks, or fraud related to federally funded contracting.
For a whistleblower to receive an NPA, they must provide original information regarding financial misconduct not already known to the DOJ. The disclosure must be voluntary, with the individual not already under federal investigation regarding the misconduct or having a previous agreement related to the misconduct. The disclosure must be truthful and complete, and the whistleblower must agree to fully cooperate and provide substantial assistance to the DOJ’s investigation. The whistleblower must agree to forfeit or disgorge any profits generated by his or her misconduct.
The pilot program is not available to company chief executive officers; chief financial officers; or anyone who is the organizer/leader of a scheme, an elected or appointed foreign official, a U.S. or law enforcement official, or anyone previously convicted of a felony or who has engaged in violent conduct.
One of the DOJ’s hoped-for results from the program is more actionable tips on financial misconduct. But in its description of potential benefits, the DOJ said the existence of the program might also provide an “incentive for companies to create compliance programs that encourage robust internal reporting of complaints; that help prevent, detect, and remediate misconduct before it begins or expands; and that allow companies to report misconduct when it occurs.”
The pilot program offering NPAs to corporate executives is complimentary to the DOJ’s whistleblower reward pilot program planned to launch later this year. That program will offer financial incentives to whistleblowers who are not involved in the apparent misconduct at issue, like programs at the Securities and Exchange Commission and the Commodity Futures Trading Commission.
The NPA pilot program took effect Monday and only applies to disclosures made after that date. The DOJ also provided an intake form for whistleblowers to report misconduct in which they were involved.
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