By Temidayo Aganga-Williams, partner and Kevin Closs, associate
On September 17, 2024, the U.S. Attorney’s Office for the Eastern District of New York (“EDNY”) announced a new whistleblower non-prosecution program (“EDNY Pilot Program”) “designed to encourage individuals to disclose original and actionable information about previously unknown criminal conduct undertaken by or through public or private entities or organizations.”
The EDNY Pilot Program applies to voluntary disclosure of information regarding: (1) fraud or corporate control failures; (2) intellectual property theft and related violations; (3) market integrity; (4) state or local bribery or fraud relating to federal, state, or local funds; (5) obstruction of justice, perjury, or false statements; (6) healthcare fraud, including violations of the Anti-Kickback statute; and (7) money laundering related to any of the prior-listed crimes.
The EDNY Pilot Program rewards corporate whistleblowers by extending non-prosecution agreements and mirrors a similar initiative launched by the U.S. Attorney’s Office for the Southern District of New York. Similarly, the U.S. Attorney’s Office for the Eastern District of Virginia launched a similar measure designed to encourage early voluntary self-disclosure of criminal conduct. These programs demonstrate a continued emphasis on corporate self-reporting by the Department of Justice (“DOJ”), whose Criminal Division announced its own Pilot Program on Voluntary Self-Disclosures for Individuals earlier this year.
EDNY Pilot Program Overview
The EDNY will enter into a non-prosecution agreement with an individual if the following conditions are met:
- The misconduct has not previously been made public and is not already known to the DOJ;
- The individual discloses the criminal conduct voluntarily to EDNY and not in response to a government inquiry or separate obligation to report misconduct; and prior to imminent threat of disclosure or government investigation;
- The individual provides substantial assistance in the investigation and prosecution of one or more equally or more culpable persons, and is prepared to cooperate fully with the EDNY;
- The individual provides complete, truthful, and accurate information, and discloses all criminal conduct in which the individual has participated and of which the individual is aware;
- The individual is not an elected, or appointed and confirmed, federal, state, local or foreign official; a federal law enforcement official; the highest-ranking person within the organization where the misconduct occurred, whether based on title or actual control;
- The individual’s role in the alleged misconduct did not involve: leading or originating the illegal activity; violence or the threat of violence; any federal or state sex offense involving fraud, force, coercion, or a minor; or any federal or state offense involving terrorism; and
- The individual has not been previously convicted of any felony involving: violence or the threat of violence; any sex offense involving force, fraud, coercion, or a minor; terrorism; or fraud or dishonesty.
To receive a non-prosecution agreement under the EDNY Pilot Program, the reporting individual will be required to forfeit or disgorge any proceeds from the criminal wrongdoing and pay restitution to victims. If an individual discloses information but does not meet all the conditions, the individual will still be eligible for a discretionary non-prosecution agreement. In such instances, prosecutors will consider a variety of factors, including the extent the conduct was previously unknown, the extent to which the individual can provide substantial assistance, and the adequacy of non-criminal sanctions.
The EDNY Pilot Program and similar non-prosecution programs are distinct from the DOJ Criminal Division’s Corporate Whistleblower Awards Pilot Program, which provides for financial awards to whistleblowers who did not meaningfully participate in criminal activity.
DOJ’s Focus on Corporate Self-Reporting
Also, on September 17, 2024, Principal Deputy Assistant Attorney General Nicole Argentieri delivered remarks on the DOJ Criminal Division’s Corporate Whistleblower Awards Pilot Program at NYU School of Law’s Program on Corporate Compliance and Enforcement. Argentieri made clear that the DOJ remained “focused on corporate accountability and corporate enforcement policies that create strong incentives for companies to take compliance seriously.” Argentieri further explained that the DOJ’s corporate enforcement policies are designed to encourage companies to (1) “invest in making their compliance programs effective” and (2) “create incentives for companies to step up and own up when misconduct occurs.”
Looking Forward
These new programs enhance incentives for individuals and companies to report corporate misconduct and will likely increase the number of DOJ inquiries faced by private entities. Further, the DOJ has made clear that it will use every tool at its disposal to encourage companies to be good corporate citizens. With increased scrutiny of corporate conduct, it is more important than ever for organizations to devote significant attention and resources to internal compliance programs.
