DOJ’s Criminal Division Announces New Pilot Program onVoluntary Self-Disclosure for Individuals

04/17/2024|5 minute read

Key Takeaways

• The Criminal Division of the U.S. Department of Justice (the Department or DOJ) recently released a new pilot program on voluntary self-disclosures for individuals, aimed at encouraging greater cooperation related to certain types of corporate crime.
• In exchange for prompt self-reporting and full cooperation, individuals with potential criminal liability may be eligible to enter into a non-prosecution agreement (NPA) with the Criminal Division where all conditions are met.
• This update to the Criminal Division policy follows the implementation of similar whistleblower pilot programs for individuals that have been issued by the U.S. Attorney's Offices for the Southern District of New York (SDNY) and the Northern District of California (NDCA) earlier this year and Deputy Attorney General Lisa Monaco's announcement in early March of a new DOJ whistleblower monetary rewards program, which is expected to be launched within the next couple of months.

Background

Under the newly announced pilot program, individuals who fully cooperate and voluntarily provide the Criminal Division with information on certain types of corporate and white-collar offenses may receive an NPA in exchange for their cooperation. The policy is intended to "provide[] transparency regarding the circumstances in which Criminal Division prosecutors will offer mandatory NPAs to incentivize individuals (and their counsel) to provide original and actionable information."

This announcement is the latest in an ongoing series of DOJ policy updates geared toward boosting cooperation with the Department. Most recently, Monaco highlighted the ongoing success of the Department's corporate Voluntary Self-Disclosure Policy, which allows companies to avoid guilty pleas and fines when they self-report wrongdoing and cooperate, and previewed the eventual implementation of a separate monetarily incentivized whistleblower program in her remarks at the ABA White Collar Crime Institute. Additionally, over the past three months, both the U.S. Attorneys' Offices for SDNY and NDCA have adopted their own whistleblower pilot programs, whereby cooperating individuals may receive an NPA in exchange for their information. The new pilot program, which applies to all Criminal Division investigations of specified corporate offenses and disclosures made on or after April 15, 2024, falls in line with the Department's continued emphasis on cooperation over the past year.

Pilot Program Requirements

While the pilot program is more expansive than similar programs in place at the district level, not all disclosures will be rewarded with an NPA. At the outset, the information being offered must relate to one of the enumerated categories of qualifying offenses, specifically (1) money laundering and related offenses; (2) violations related to the integrity of financial markets; (3) foreign bribery and corruption; (4) health care fraud and illegal kickbacks; (5) fraud related to federally funded contracting; and (6) domestic bribery. Information-related offenses handled by other components of the DOJ, such as criminal tax violations and sanctions violations, will not qualify for the pilot program without the coordination and approval of the component with charging authority over those offenses.

Eligibility is also limited based on the cooperator's background and role in the offense. CEOs, CFOs, foreign and domestic officials, and employees of any domestic law enforcement agency cannot receive the benefits of the pilot program. Additionally, leaders and organizers of the reported misconduct will not receive credit for their disclosure under this pilot program. Certain prior criminal offenses, including any prior felony conviction, any prior conviction involving fraud or dishonesty, and crimes of violence, will also disqualify individuals from the program.

Beyond the threshold requirements, the policy sets forth standardized criteria for cooperation, many of which mirror both the existing SDNY and NDCA policy requirements as well as the requirements for a traditional cooperation agreement:

1. Original Information. In order to receive credit, individuals must provide "non-public information not previously known to the Criminal Division or to any component of the Department of Justice." Prompt reporting (in advance of disclosure by others) is therefore more likely to result in full credit under the pilot program.
2. Voluntary Cooperation. Reports made in response to any government inquiry or request will not be considered "voluntary" under the new policy. Rather, only disclosures made in the absence of any government investigation, the threat of imminent disclosure, and any preexisting reporting requirement will qualify for the pilot program.
3. Complete and Truthful Disclosure. Similar to the SDNY and NDCA policies, the Criminal Division's pilot program requires participants to disclose "all information known to the individual related to any misconduct in which the individual has participated and/or of which the individual is aware," including the cooperator's own role in the wrongdoing.
4. Full Cooperation and Substantial Assistance. Participants must provide substantial assistance in the investigation or prosecution of at least one individual who is equally or more culpable than the cooperators themselves.
5. Forfeiture of Ill-Gotten Gains. Finally, individuals must agree to forfeit or disgorge any profits received as a result of the misconduct and to pay any applicable restitution.

If all of the above criteria are met, the individual will receive an NPA. However, even when the requirements are not met in full, prosecutors may offer NPAs to individuals in appropriate circumstances, pursuant to existing cooperation policies.

While there are many similarities between the new pilot program and the existing SDNY and NDCA policies, they differ in some important ways. The Criminal Division program applies to a broader range of offenses than the district level programs, including federal bribery, foreign bribery, violations of the Federal Corrupt Practices Act, health care fraud, and federal contracting fraud. Additionally, the SDNY policy excludes anyone who "is or is expected to become of major public interest" from participation in its program, whereas the Criminal Division program only excludes certain C-level executives, scheme leaders or organizers, and public officials. Finally, unlike the SDNY and NDCA policies, the Criminal Division program explicitly requires the forfeiture of criminal proceeds and the payment of restitution or victim compensation.

Conclusion

The DOJ's focus on corporate and public corruption offenses and self-disclosure and cooperation shows no sign of slowing, and we can expect further guidance from the DOJ as it collects and analyzes data about relevant disclosures during the pilot program to determine whether further modifications are needed. Beyond encouraging the disclosure of actionable information, the pilot program is also intended to "further encourage companies to create compliance programs that help prevent, detect, and remediate misconduct and to report misconduct when it occurs," which has been another key focus of the DOJ. Companies would be well advised to review existing compliance programs and internal controls early to ensure that current procedures are sufficient to effectively detect and prevent misconduct. Companies should also ensure that they are encouraging internal reporting by maintaining reporting mechanisms that are robust, accessible, and designed to facilitate prompt and thorough investigation of complaints with appropriate remediation. Additionally, it is critical that companies and individuals consult with outside counsel as to whether to self-report as soon as any potential misconduct is detected, because time is of the essence with the pilot program.

The BakerHostetler White Collar, Investigations, and Securities Enforcement and Litigation team is composed of dozens of experienced individuals, including attorneys who have served in the DOJ and at the U.S. Securities and Exchange Commission (SEC). Our attorneys include a former U.S. attorney, former assistant U.S. attorneys and unit chiefs, as well as partners who have served in the SEC's Division of Enforcement and the SEC's Office of the General Counsel. Our team has extensive experience in defending regulatory investigations and litigation and in providing compliance counseling. Please feel free to contact any of our experienced professionals if you have questions about this alert.

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