The Criminal Division Corporate Whistleblower Awards Pilot Program seeks to expand existing whistleblower efforts by targeting areas not covered by other federal programs. In its first month, the program received reports from more than 100 tipsters.

What Is Whistleblowing?

Whistleblowing occurs when an employee exposes an employer’s wrongdoing to outsiders, such as the media or government regulatory agencies. Whistleblowers are often crucial in exposing financial fraud, corruption, and other corporate wrongdoing.

Whistleblowers face several challenges when coming forward with information, including the risk of retaliation, financial and legal difficulties, and emotional stress. The emotional toll can be significant. Additionally, whistleblowers often fear their concerns will be ignored or that they’ll damage their professional reputation, making future employment difficult. Plus, only a small fraction of federal whistleblower cases are pursued, and those who file often aren't fully aware whether a law has been violated. It can be problematic if your organization discovers you filed a false claim that isn't recognized as a violation by the Justice Department. These risks make the decision to report corporate misconduct a complex and daunting one

To encourage more whistleblowers to come forward, governments and organizations often provide protections and financial incentives. These programs can lead to the recovery of large sums of money lost to fraud and misuse.

DOJ’s Corporate Whistleblower Program

The DOJ’s Criminal Division Corporate Whistleblower Awards Pilot Program is designed to incentivize individuals to report corporate malfeasance. Over a three-year trial period, the program will focus on key areas of misconduct including:

  • Money laundering within financial institutions
  • Corruption and bribery, particularly in foreign countries
  • Kickbacks involving public officials
  • Fraud within private healthcare systems not covered by existing laws like the False Claims Act (FCA)

Whistleblowers who provide substantial tips that lead to financial recoveries through asset forfeiture may receive a portion of the recovered funds (up to 30% of assets). Companies that voluntarily self-report within 120 days of receiving an internal whistleblower report may be able to avoid prosecution if the company reports itself to the DOJ before the DOJ contacts the company.

While the DOJ's new program shares some similarities with other federal whistleblower programs, it program fills gaps left by existing frameworks. Other key federal programs include:

  • False Claims Act (FCA): Focuses on fraud committed against federal programs such as Medicare or Medicaid.
  • Anti-Money Laundering Whistleblower Program: Awards disclosures made to the Treasury or Justice Departments that expose money laundering made unlawful under the Bank Secrecy Act.
  • Internal Revenue Service (IRS) Whistleblower Office: Focuses on tax fraud.
  • Securities and Exchange Commission (SEC) Whistleblower Program: Targets securities fraud and insider trading.
  • Commodity Futures Trading Commission's Whistleblower Program (CFTC) Whistleblower Program: Oversees commodity trading fraud and misconduct.

The new DOJ program primarily aims to address issues involving private insurance and healthcare fraud, as well as foreign corruption and bribery cases that other whistleblower programs may not cover. This makes it a valuable tool for extending protection and incentivization to a broader range of whistleblowers.

Impact of the New Program

By filling gaps in current laws, the DOJ expects this new whistleblower program to increase enforcement in areas that previously lacked coverage. For instance, healthcare fraud involving private insurers, which was previously not eligible for whistleblower awards, can now be reported under this program. The DOJ hopes this will lead to more significant financial recoveries and deter corporate misconduct.

There’s been strong support for the DOJ’s new whistleblower program, but some members of the white-collar crime legal sector have raised concerns that certain aspects might discourage potential whistleblowers. Key issues include the program's funding, anonymity protections, the lack of a guaranteed minimum payout, and the increased discretion given to the DOJ over award decisions. However, since it’s a pilot program, there is room for adjustments based on feedback.

In the Classroom

This article can be used to discuss whistleblowing (Chapter 2: Business Ethics and Social Responsibility).

Discussion Questions

1.     What is whistleblowing and how does it contribute to corporate transparency and accountability?

2.     What are some potential challenges whistleblowers might face when deciding to come forward with information?

3.     In what ways does the DOJ’s new whistleblower program address gaps in existing programs?

This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell, Linda Ferrell, and Geoff Hirt.