On April 15, the U.S. Department of Justice released The Criminal Division’s Pilot Program on Voluntary Self-Disclosures for Individuals (the Pilot) designed to encourage individuals to report certain types of criminal activity in return for protection from prosecution. The Pilot follows the DOJ’s previously announced plan to create a new initiative expanding the existing whistleblower bounty program (the Program) to offer financial rewards to incentivize the reporting of “significant corporate or financial misconduct” otherwise unknown to the government. The Pilot appears intended to fill a gap left by the Program; namely, that whistleblowers involved in the criminal activity reported would not be eligible to receive a financial award.
The Pilot is premised upon an obvious truth: Those involved in wrongdoing arguably have a more compelling need than collecting a bounty – the ability to avoid criminal prosecution for their actions. The Pilot recognizes this fact and creates a system whereby whistleblowers complicit in criminal activity would nevertheless be eligible to receive a benefit: a non-prosecution agreement in return for their cooperation. NPAs effectively shield individuals from conviction and punishment, and essentially act as a “get out of jail free card” for those involved in criminal activity.
As the DOJ itself recognized in announcing the Pilot:
The prospect of an NPA may provide a strong incentive for individuals to bring to the Criminal Division’s and law enforcement’s attention actionable, original information about criminal conduct that might otherwise go undetected or be impossible to prove.
The Pilot lists a wide range of criminal activity for which NPAs may be available, including:
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[.]
The Pilot creates numerous prerequisites for eligibility, including that the self-disclosure be truly “voluntary,” that it be “truthful and complete,” and that the reporting individual “must agree to fully cooperate with and be willing and able to provide substantial assistance.” Those who seek to report under the Pilot must also agree to disgorge any profit they made.
At this point, it is also unclear whether an NPA represents the floor for those who provide information under the Pilot. Criminal Division prosecutors will still retain discretion to offer an NPA to individuals in “appropriate circumstances,” including those individuals who fail to meet the criteria listed in the Pilot. But what about those circumstances where the criteria are met? Could a particularly valuable whistleblower avoid all sanctions, even the relatively minimal ones that might be contained in an NPA? Only time will tell.
Perhaps the most interesting aspect of the Pilot is its underlying motivation. While the DOJ certainly wishes to uncover new cases through these direct whistleblower reports, the Pilot is clearly designed to achieve a result that is far more important to the government – altering the decision-making calculus companies undertake when deciding whether to self-disclose criminal violations. In announcing the Program, the DOJ made clear its message to companies who discover that its agents have engaged in criminal activity: “Knock on our door before we knock on yours.” By coupling the Pilot with the Program, the DOJ takes an additional step in its effort to generate cases from two sources: individuals who report the info to benefit/protect themselves and the companies who self-disclose ahead of such reports in order to avoid being on the wrong side of such a report.