On April 15, 2024, the Criminal Division of the U.S. Department of Justice (DOJ) issued a new Pilot Program on Voluntary Self-Disclosures for Individuals. Largely (but not entirely) similar to programs announced earlier this year by the U.S. Attorneys’ Offices for the Southern District of New York (SDNY) and the Northern District of California (NDCA) (discussed in prior Alston & Bird client advisories available here and here), the Criminal Division’s policy adds yet another option to the suite of incentives for individuals to disclose corporate misconduct to federal authorities, and it unmistakably signals a continued appetite in some of the DOJ’s most high-profile and active components to prioritize corporate criminal enforcement.
The Criminal Division’s Pilot Program
In contrast to the monetary incentives offered by the U.S. Securities and Exchange Commission for voluntary reporting and expected in the forthcoming DOJ Whistleblower Pilot Program, the Criminal Division program issued on April 15 offers protection against criminal prosecution (in the form of a non-prosecution agreement) for reporting individuals when eight criteria are met:
- The disclosure is made to the Criminal Division at Pilot@usdoj.gov.
- The reporting individual must disclose “original information” or information that was not previously made public and is unknown to any component of the DOJ.
- The information relates to offenses by corporations (including financial institutions) and their insiders involving fraud, money laundering and Bank Secrecy Act violations, the undermining of the integrity of financial markets, foreign bribery and corruption, health care fraud, federal procurement and contracting fraud, or domestic public corruption.
- The reporting individual’s disclosure is voluntary—it is not pursuant to a government request, to another obligation to report, or in the face of an already existing government investigation or “threat of imminent disclosure to the government or the public.”
- The reporting individual tells all—that is, truthfully and completely divulges all criminal conduct the individual is aware of and the individual has participated in.
- The reporting individual “must agree to fully cooperate with and be willing and able to provide substantial assistance” to the DOJ Criminal Division, including “working in a proactive manner” with federal law enforcement.
- The reporting individual must “forfeit or disgorge any profit from the criminal wrongdoing and pay restitution or victim compensation.”
- The reporting individual must have no prior convictions for criminal conduct involving fraud, dishonesty, the use of force or violence, any sex offense involving fraud, force, or coercion or relating to a minor, or any offense involving terrorism. At the same time, the reporting individual may not be: (1) the chief executive officer or chief financial officer (or the equivalent) of any company; (2) the organizer/leader of the criminal scheme; (3) elected or appointed as a foreign government official; or (4) a domestic government official at any level.
Even if all of these requirements are not satisfied, the Criminal Division nevertheless will consider entering into a non-prosecution agreement with a reporting individual “in accordance with the Justice Manual and Criminal Division procedures,” which include consideration of whether “the person’s timely cooperation appears to be necessary to the public interest and other means of obtaining the desired cooperation are unavailable or would not be effective,” and more specifically, the weighing of (1) the importance of the investigation; (2) the value of the person’s cooperation; (3) the person’s relative culpability; and (4) the interests of any victims.
Similarities to and Differences from SDNY and NDCA Programs
The Criminal Division’s Pilot Program adds to the panoply of reporting incentives offered by DOJ components to individuals who face potential criminal exposure as a result of their involvement in corporate criminal wrongdoing. In contrast to the SDNY and NDCA programs, the Criminal Division’s Pilot Program is not styled as a “whistleblower” program. This presumably is due to the anticipated deployment of a “DOJ-run whistleblower rewards program” announced in March 2024, and for which only individuals “not involved in the criminal activity itself” will be eligible. In the meantime, the Criminal Division’s Pilot Program is pitched to those who have a “role in the misconduct,” like the SDNY and NDCA programs, but there are important differences between the three programs.
Whereas all three programs require that the disclosed information relate to certain specified varieties of corporate criminal wrongdoing such as fraud, domestic bribery, and offenses affecting market integrity, the NDCA program also includes “intellectual property theft and related violations.” Overall, the Criminal Division’s program has a narrower approach, aligned with the types of corporate criminal offenses investigated and prosecuted by its key constituent offices, such as money laundering and Bank Secrecy Act violations, conduct affecting market integrity, health care fraud, federal procurement and contracting fraud, and (domestic) public corruption. Importantly, the Criminal Division’s program also explicitly invites disclosures involving “violations related to foreign corruption and bribery”; the SDNY and NDCA explicitly disavow interest in such disclosures, in recognition of DOJ policy that confers primacy in Foreign Corrupt Practices Act and Foreign Extortion Prevention Act matters to the Criminal Division’s Fraud Section.
Other notable areas of comparison between the three policies include:
- Like the NDCA program but unlike the SDNY program, the Criminal Division’s program:
- Appears to set a higher bar for crediting the novelty of the information disclosed and the voluntariness with which it is disclosed by (1) explicitly precluding credit for disclosing information that, although not known to the Criminal Division itself, is already known to some other part of the DOJ; and (2) explicitly requiring that in order to be considered “voluntary,” a disclosure must be made “in the absence of any … threat of imminent disclosure to the government or the public.”
- Invites disclosure from a broader range of individuals by not excluding from program eligibility “a person who otherwise is, or is expected to become, of major public interest.”
- Requires a reporting individual to “agree to forfeit or disgorge any profit from the criminal wrongdoing and pay restitution or victim compensation.”
- Unlike both the NDCA and the SDNY programs, the Criminal Division’s program:
- Excludes “elected or appointed foreign government official[s]” from eligibility, as well as any individual who is “the organizer/leader of the [criminal] scheme.”
- Explicitly requires a reporting individual to agree to work with law enforcement “in a proactive manner” if asked.
Key Takeaways
- Continued DOJ Emphasis on Corporate Criminal Enforcement. The new Criminal Division Pilot Program, along with the SDNY and NDCA policies, the forthcoming DOJ Whistleblower Pilot Program, and the many other corporate criminal enforcement policy changes announced over the past year and more (many of which are detailed in prior Alston & Bird client advisories), signal unmistakably that the DOJ is intent on increasing the volume of its corporate criminal investigations and prosecutions through all available means.
- More Options for Whistleblowers = More Risk for Companies. The announcement of the Criminal Division’s program creates yet another avenue for individuals considering disclosing corporate misconduct they may face criminal exposure from, and in combination with the SDNY and NDCA programs, largely covers the waterfront of fraud- and corruption-related conduct such individuals might seek to report. Factors including the differences between the programs will require reporting individuals to carefully evaluate which DOJ component/program to apply to, but it is unlikely such individuals will find themselves ineligible for at least one of the programs. Accordingly, it is now more likely than ever that a company’s misconduct will come to the DOJ’s attention even without the company disclosing it, leaving the company reacting to a DOJ investigation rather than having the ability to self-disclose (if desired) and otherwise proactively engage with the DOJ.
- Investment in Compliance and Internal Controls Critical. With the DOJ continuing to escalate its efforts to identify corporate misconduct through individual disclosures, it is now more important than ever to ensure that corporate compliance programs and internal controls, as well as internal reporting mechanisms, are thoroughly reviewed. It is similarly important that, when necessary, such measures are enhanced to maximize their ability to deter and prevent, as well as to detect and respond to misconduct.