A new federal whistleblower program went into effect Aug. 1, offering rewards to people who expose financial fraud and corporate corruption.
The government has for many years paid rewards under the existing whistleblower program, the False Claims Act, which is limited to civil cases involving abuse of the government’s huge federal contracting system, and also in a few areas of thhe financial and commodity industry. The new program encompasses enforcement areas outside of the government, including corporations, healthcare, financial institutions and foreign and domestic corruption. Similar programs
How it works: A person who has knowledge of white-collar crime files a claim, and the government then investigates. A claim that results in more than $1 million in forfeiture by the offending company will result in a payout to the person filing the claim.
A claimant may not have been involved in the activity that is said to be illegal. A claimant with a successful case could be eligible to receive up to 30 percent of the first $100 million in company forfeitures and 5 percent on additional proceeds up to $500 million. The program promises to protect whistleblowers against retaliation.
Corporate misconduct
The fact sheet on the program says: “DOJ’s pilot program is modeled on successful whistleblower programs run by the SEC, CFTC, and FinCEN, and seeks original information about corporate misconduct not covered by those programs. DOJ’s program is focused initially on four areas: (1) certain crimes involving financial institutions and their employees; (2) foreign corruption involving privately held companies and others that are not issuers of U.S. securities; (3) domestic corruption involving companies; and (4) health care fraud schemes targeting private insurers not subject to qui tam recovery under the False Claims Act. (Pilot Program Guidance § II.3.)”
Chris Deacon, an expert in healthcare law and founder of VerSan, a healthcare consultancy, wrote on LinkedIn: “This program could significantly impact private insurer conduct, providing a crucial tool to uncover and address fraud in the current market. However, it remains to be seen how effectively this initiative will be implemented and whether it will truly incentivize whistleblowers to come forward.
“Documented pitfalls in the current whistleblower system include delays in processing claims, inadequate protection against retaliation, and insufficient rewards, which can deter potential whistleblowers. The success of the new program will depend on the DOJ’s commitment to overcoming these challenges, protecting whistleblowers, and ensuring fair and substantial rewards for their invaluable information.”
Similar programs beyond the False Claims Act have had substantial results. “The SEC received 18,000 tips in fiscal 2023, up nearly 50 percent from a year earlier, and paid a record $600 million to 68 whistleblowers. The CFTC received 1,530 tips and paid seven whistleblowers a total of $16 million last year,” The Washington Post reported.
On the Justice Department web page detailing the program, several links are offered.
“Program guidance can be found here.
“Our fact sheet can be found here.
“Our intake form can be found here
“You can download the Whistleblower Intake Form and email to us here: CorporateWhistleblower@usdoj.gov
“Claim forms will be available on this website soon.”
“A whistleblower award is made in the Department’s sole discretion.
