Corporate insiders with knowledge of misconduct that may not involve securities violations will soon be able to seek rewards for tipping off the U.S. Department of Justice (DOJ).
Speaking at a conference on white-collar crime in San Francisco Thursday, Lisa Monaco, deputy U.S. attorney general, announced the DOJ will launch a whistleblower program that pays for tips that lead to convictions.
“Today, we’re launching a 90-day sprint to develop and implement a pilot program, with a formal start date later this year,” she said.
The U.S. Securities and Exchange Commission (SEC), the U.S. Commodity Futures Trading Commission (CFTC) and the Internal Revenue Service, along with other federal agencies, already pay for tips. But Monaco said they are limited to the agencies’ specific jurisdictions.
“These programs have proven indispensable — but they resemble a patchwork quilt that doesn’t cover the whole bed. They simply don’t address the full range of corporate and financial misconduct that the Department prosecutes,” she said.
The DOJ’s program will accept tips about any violation of federal law, although it will be particularly interested in information about criminal abuses of the U.S. financial system, foreign corruption cases that fall outside the jurisdiction of the SEC, and domestic corruption, especially involving illegal corporate payments to government officials.
“Used proactively, this program will fill gaps. It will create new incentives for individuals to report misconduct to the department. And it will drive companies to invest further in their own internal compliance and reporting systems,” Monaco said.
Stephen Kohn, whistleblower attorney with Kohn, Kohn & Colapinto in Washington, D.C., and chairman of the National Whistleblower Center, called on the DOJ to adopt some of the features of the SEC’s program for its own initiative.
“We hope the DOJ will follow the lead of the SEC and CFTC and establish a central whistleblower office that can accept anonymous and confidential complaints. Such a program has been required under the anti-money laundering whistleblower law for over three years, but Justice has simply failed to follow the law,” he said in a release.
Kohn also criticized the DOJ’s intention to pay rewards only to people who aren’t also involved in criminal activity.
“The Justice Department’s decision to exclude persons who may have had some involvement in the criminal activity is a step backwards,” he said.
“When the False Claims Act was signed into law by President Abraham Lincoln in 1863 it was widely understood that the award laws worked best when they induced persons who were part of the conspiracy to turn in their former associates in crime,” he added. “Justice needs to understand that by failing to follow the basic tenets of the most successful whistleblower laws ever enacted, their program is starting off on the wrong foot.”