DOJ's New Whistleblower Program Faces Scrutiny from Legal Experts

The U.S. Department of Justice's recently launched whistleblower reward program is drawing both praise and criticism from legal experts in the field. While many welcome the initiative, concerns have emerged about key aspects of the three-year pilot program.

Introduced last week, the program offers financial incentives to individuals who provide original information or analysis related to financial crimes, bribery, or healthcare fraud. Deputy Attorney General Lisa Monaco announced the program in March, aiming to bridge gaps between existing whistleblower programs at other agencies.

Legal professionals specializing in whistleblower cases have identified several potential shortcomings in the program's structure:

1. Funding Uncertainty: Unlike some established whistleblower programs, the DOJ's initiative lacks a dedicated fund for payouts. This raises questions about the consistent availability of rewards.
2. Award Cap: The program imposes a $50 million ceiling on individual awards. Some attorneys argue this could deter high-level whistleblowers from coming forward in cases involving massive fraud.
3. Payout Calculation: Whistleblower awards are calculated after compensating individual victims in forfeiture cases, potentially reducing the final payout to tipsters.
4. Discretionary Nature: The DOJ retains significant discretion in determining award amounts, which some experts view as introducing too much uncertainty for potential whistleblowers.
5. Complex Eligibility Criteria: The types of misconduct qualifying for awards are seen as potentially confusing, covering a broad range of companies but focusing on specific subject areas.

Despite these concerns, some in the legal community see the program as a positive step. David Kovel, managing partner at Kirby McInerney, praised the DOJ's approach: "This is a group that is enthusiastic about trying to bring whistleblowers in. It strikes me as it's the right attitude for success."

For companies, the new program adds pressure to bolster internal reporting and investigation protocols. Jane Norberg, a partner at Arnold & Porter and former head of the SEC's whistleblower program, advised: "Companies need to make sure managers who are hearing a tip will get the information to the right people in the company, so that they can start the investigation immediately."

The Justice Department has stated it welcomes input to improve the program. As the pilot progresses, legal experts and policymakers will likely watch closely to see how these concerns play out in practice and whether adjustments are needed to maximize the program's effectiveness in combating fraud and corruption.

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