DOJ’s Criminal Division Announces Voluntary Self-Disclosure Pilot Program for Individuals | JD Supra

Based on a carrot and stick approach, the Department of Justice’s (“DOJ” or “Department”) guidance in 2023 focused heavily on incentivizing companies to voluntarily self-disclose their misconduct. This guidance included the Criminal Division’s Revised Corporate Enforcement Policy (the “CEP”), the United States Attorney’s Offices’ Voluntary Self-Disclosure Policy (the “VSD Policy”), and the Safe Harbor Policy for voluntary self-disclosures made in connection with mergers and acquisitions (the “Mergers and Acquisitions Safe Harbor Policy”).[1]

Under this new policy framework, absent aggravating circumstances, companies that 1) voluntarily disclose their misconduct to the DOJ, 2) fully cooperate with the ensuing investigation, and 3) resolve it in a timely and appropriate manner, will receive the presumption of a waiver . However, to obtain the benefits associated with voluntary self-disclosure, a company generally must provide original information not already known to the government.

The voluntary self-disclosure pilot program for individuals

On April 15, 2024, the Criminal Division announced a new Voluntary self-disclosure pilot program for individuals (the “Individual VSD Pilot Program” or the “Pilot Program”) of criminal conduct involving corporations. The VSD Pilot Program for Individuals offers the possibility of a Non-Prosecution Agreement (“NPA”) to individuals who “bring to the attention of the Criminal Division and law enforcement original and actionable information about criminal conduct that is otherwise not detected or cannot be demonstrated.

At a high level, the Pilot Program offers NPAs to individuals who 1) voluntarily self-disclose original information about certain types of criminal conduct involving corporations, including the full extent of their own role in the misconduct; 2) cooperate fully with the authorities; and 3) pay any applicable victim compensation, restitution, forfeiture or disgorgement, including return of ill-gotten gains.[2]

The specific eligibility requirements set forth in the VSD Pilot Program for Individuals are as follows:

• Reporting channel: Disclosures must be made to the Criminal Division a [email protected].

• Original information: The whistleblower must disclose the original information, which is defined as non-public information that is not already known to any component of the Department.

• Applicable offenses: The information reported must relate to one or more of the following categories of corporate misconduct:
  • Violations by financial institutions, their privileged users or agents, including schemes involving money laundering, anti-money laundering, money transmission company registration and fraud statutes, and fraud or compliance with institutional regulators financial
  • Violations related to the integrity of financial markets committed 1) by financial institutions, investment advisers or investment funds, 2) by or through public companies or private companies with 50 or more employees, or 3) by insiders or agents of these entities;
  • Offenses related to foreign bribery and corruption, including violations of the Foreign Corrupt Practices Act, violations of the Foreign Extortion Prevention Act, and violations of money laundering laws of capitals;
  • Offenses related to health care fraud or illegal health care kickbacks committed by or through public or private companies with 50 or more employees
  • Violations by public or private companies with 50 or more employees involving fraud against the United States or deception of the United States in connection with federally funded contracts, when such fraud does not involve health care or illegal kickbacks ‘health care; i
  • Offenses related to the payment of bribes or kickbacks to national public officials.
• Volunteering: Disclosure must be voluntary, that is to say:
  • It is made before the individual receives any request, inquiry, or demand related to the subject matter of the disclosure from the DOJ or another federal, regulatory, or civil law enforcement agency;
  • The person has no pre-existing obligation to communicate the information; i
  • Disclosure is made in the absence of any government investigation or threat of imminent disclosure to the government or the public.

• True and complete disclosure: The disclosure must be truthful and complete, meaning that the person making the disclosure must provide all the information they know related to the misconduct, including the full extent of the person’s role and all matters about the DOJ requested.

• Total cooperation and assistance: The reporting individual must agree to cooperate fully with the Department and, if necessary, provide substantial assistance in its investigation and prosecution of equally or more culpable individuals or entities. This effort may include testifying in interviews, before a grand jury, or at trial; produce documents, records and other evidence; and work proactively with law enforcement and their agents.

• Monetary Requirements: The reporting person must accept the forfeiture or disbursement of any proceeds of the criminal offense and pay restitution or compensation to the victim.

• Prohibited individuals: The reporting person he can not be a member of any of the following categories:
  • Anyone who has engaged in criminal conduct involving violence, use of force, threats, significant harm to the patient, any sexual offense involving fraud, force or coercion, or involving a minor, or any offense involving terrorism;
  • The CEO (or equivalent) or CFO (or equivalent) of a company or the plan organizer/leader;
  • An elected or appointed foreign government official;
  • A national government official at any level, including any employee of a law enforcement agency; i
  • One who has a previous felony conviction or a conviction for conduct involving fraud or dishonesty.

Prosecutors in the Criminal Division retain the right to offer an NPA to individuals who proactively come forward, but who do not meet all of the above requirements in full, in accordance with the Justice Manual and other procedures of the Criminal Division.

The DOJ has stated that it believes the benefits offered to guilty individuals under the Pilot Program will incentivize companies to create compliance programs that incorporate robust internal reporting mechanisms that will “help prevent, detect and correct misconduct before that it begins or expands’ and ‘allow’. that companies report misconduct when it occurs.” The point here is that companies should want to have compliance programs in place to prevent or detect wrongdoing before an individual is incentivized under the Pilot Program to report it to the DOJ, outside of company compliance channels.

Moreover, the pilot program, especially when considered against the backdrop of other recent DOJ policy announcements, creates additional pressure for companies that discover potential misconduct to rush to the DOJ’s door and voluntarily disclose. In March, Assistant Attorney General (“DAG”) Lisa Monaco also previewed the development of a new one Whistleblower Rewards Programwhich will offer financial incentives to certain whistleblowers (who were not involved in the reported misconduct) who disclose original information to the DOJ.[3] DAG Monaco explained that a “90-day sprint” is currently underway to develop and implement the Whistleblower Rewards Program.

After the Whistleblower Rewards Program ends, in order to provide the DOJ with original information, companies may have to compete with both at-fault employees seeking an NPA under the Pilot Program and non-at-fault employees seeking the financial benefits associated with reporting. In other words, if they take the time to conduct a thorough internal investigation into possible misconduct, companies run the risk of significantly reducing their credit at the time of resolution because one of their own employees may disclose the information. first as an individual.

The Pilot Program became effective immediately on April 15, 2024. The Criminal Division intends to collect anonymized statistical data on the disclosures it receives to determine whether to expand or modify the Pilot Program.

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