On August 1, 2024, the U.S. Department of Justice (DOJ) launched a new cash-for-tips incentive for whistleblowers. Individuals who turn over original information or analysis relating to:
- financial crimes
- bribery or
- healthcare fraud
are eligible for an award of up to 30% of any assets forfeited by the company as a result of that information.[1]
Under the program, a whistleblower may receive up to 30% of the first $100 million of forfeited proceeds, then up to 5% of proceeds between $100 million and $500 million.[2] The DOJ has discretion in deciding the percentage based upon multiple factors.[3] Whistleblower awards under this incentive are effectively capped at $50 million.[4]
The program has two important caveats. First, the whistleblower cannot be meaningfully involved in the misconduct in question.[5] Second, the individual cannot obtain the information through their work as a compliance officer or internal auditor of the company.[6]
With the program, the DOJ joins many other federal agencies offering the potential of significant monetary awards. The Securities and Exchange Commission operates a whistleblower program that awarded nearly $600 million during the government’s 2023 fiscal year.[7] The SEC last year awarded a record $279 million to a single whistleblower. The Commodity Futures Trading Commission, which regulates the U.S. derivatives market, operates a program similar to the SEC’s that awarded $16 million last year.[8] Likewise, the Internal Revenue Service can pay people who report tax evasion.[9]
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[1] Tokar, Dylan. Justice Department Trial Program Offers Millions for Tips on Fraud, Bribery, The Wall Street Journal (Aug. 1, 2024). Available at https://www.wsj.com/articles/justice-department-trial-program-offers-millions-for-tips-on-fraud-bribery-5e4c710d?mod=article_inline.
[2] Sun, Mengqi. Whistleblower Legal Sector Welcomes DOJ Pilot Program, but Concerns Remain, The Wall Street Journal (Aug. 6, 2024). Available at https://www.wsj.com/articles/whistleblower-legal-sector-welcomes-doj-pilot-program-but-concerns-remain-59fee162?page=1.
[3] Id.
[4] Id.
[5] Note 1.
[6] Note 1.
[7] Michaels, Dave. Justice Department to Pay Whistleblowers Who Tip on Corporate Crime, The Wall Street Journal (Mar. 7, 2024). Available at https://www.wsj.com/articles/justice-department-to-pay-whistleblowers-who-tip-on-corporate-crime-191fc2e5?mod=article_inline&mod=article_inline.
[8] Id.
[9] Id.