DOJ’s new Voluntary Self Disclosure Pilot Program: What do CCOs and GCs need to know?

The April 15, 2024 release of the Voluntary Self Disclosure (VSD) Pilot Program by the US Department of Justice (DOJ)’s Criminal Division is aimed at encouraging individuals to self-disclose misconduct involving corporations. With the Pilot Program’s release, chief compliance officers (CCO) and general counsels (GC) have an additional tool at their disposal to encourage their companies to invest in the development of trusted reporting channels and other compliance controls that prevent and detect misconduct – and allow the company to address, remediate, and disclose the misconduct, if appropriate – before an individual is incentivized to make reports outside of the company.

The Pilot Program follows an announcement in March of a new DOJ-run whistleblower rewards program. These two new programs – coupled with the DOJ’s Voluntary Self-Disclosure Policy for corporations, announced in February 2023 – reinforce the DOJ’s continued expectations that companies build robust internal controls to proactively mitigate risks to the organization and uncover potential misconduct.

DOJ’s message to companies is clear: Investing in building a culture of trust that rewards ethical behavior, and penalizes those who break the rules, is paramount. Further, if employees do not trust that their concerns will be taken seriously, addressed appropriately, and valued by the company, they may bring their concerns elsewhere – and the individual, not the company, will receive the benefit of the disclosure. These “sticks” also require companies to ensure they carefully assess when it may be appropriate to avail themselves of the DOJ’s incentives to come forward before their employees do.

Key details of the Pilot Program

Under the new Pilot Program, an individual who engaged in misconduct, but discloses the misconduct and cooperates with the government, may receive a Non-Prosecution Agreement (NPA) if certain criteria are met. To be eligible to obtain an NPA under the Pilot Program, an individual must:

1. Fill out the DOJ’s VSD intake form and email the disclosure to the Criminal Division at NPA.Pilot@usdoj.gov
2. Disclose original information (non-public information not previously known to the Criminal Division or to any component of the DOJ), and the information must relate to at least one of the topics mentioned below
3. Disclose information voluntarily before (i) any request, inquiry, or demand relating to the subject matter is sent by the DOJ in connection with the same misconduct, (ii) when the individual has no preexisting obligation pursuant to an agreement in connection with a criminal prosecution or civil enforcement action, and (iii) is in the absence of any government investigation or threat of imminent disclosure to the government or public
4. Disclose truthful and complete information, including all information known to the individual and any misconduct in which the individual has participated and/or is aware
5. Agree to fully cooperate with and be willing and able to provide substantial assistance to the DOJ including providing testimony, documents, records, and any other evidence when called upon the Criminal Division, and work in a proactive manner under the supervision of, and in compliance with, US law and enforcement officers and agents, and
6. Agree to forfeit or disgorge any profit from the wrongdoing and pay restitution or victim compensation.

Qualifying individuals

Chief Executive Officers, Chief Financial Officers, or their equivalents do not qualify to participate in the Pilot Program, nor do elected or appointed government officials (both domestic and foreign), law enforcement, or the organizers/leaders of the scheme.

The reporting individual also will be disqualified from participation in the Pilot Program if they engaged in certain criminal conduct involving violence, force, threats, and sexual crimes, or if they have any previous felony convictions for crimes involving fraud or dishonesty.

Applicable disclosures

Initially, the Pilot Program will only apply to disclosures that include information regarding the following types of criminal conduct involving corporations:

1. Violations by financial institutions, their insiders, or agents, including money laundering, anti-money laundering, registration of money transmitting businesses, fraud statutes, and fraud against or compliance with financial institution regulators
2. Violations related to the integrity of financial markets undertaken by financial institutions, investment advisors, or investment funds by or through public companies or private companies with 50 or more employees, or by any insiders or agents of such entities
3. Violations by or through public or private companies related to foreign corruption and bribery, including violations of the Foreign Corrupt Practices Act, Foreign Extortion Prevention Act, and money laundering statutes
4. Violations by or through public or private companies with 50 or more employees related to healthcare fraud or illegal healthcare kickbacks committed
5. Violations by or through public or private companies with 50 or more employees related to fraud against, or deception of, the US in connection with federal contracts, and
6. Violations committed by or through public or private companies related to the payment or bribes or kickbacks to domestic public officials.

Prosecutors retain discretion to offer an NPA to individuals under the appropriate circumstances, including when individuals come forward pursuant to the Pilot Program, but the criteria above are not met in full, in accordance with the Justice Manual and Criminal Division procedures.

What can companies do?

CCOs and GCs should consider reviewing their current compliance policies and procedures to determine whether any gaps or shortcomings exist, where enhancements can be made to encourage internal reporting, and to create an environment where the company – working collaboratively with its personnel – identifies, addresses and, where appropriate, reports alleged misconduct.

Specifically, companies are advised to:

• Review escalation policies, reporting mechanisms, and related trainings to ensure that the company is able to effectively detect and address misconduct
• Build employee confidence in the compliance program and empower reporters internally through promotion of compliance channels, anti-retaliation policies and metrics surrounding good-faith reports, related investigations, and remedial actions taken by the company to address any reports (as appropriate)
• Conduct periodic risk assessments – including analyzing trends from prior reports and investigations, as well as when the company launches a new business line or product, enters a new geographic region and/or expands its customer base – to determine vulnerabilities and ensure compliance controls are fit-for-purpose, and
• Hold employees accountable for compliance and incentivize ethical behavior through bonuses, recognition, and other rewards.

To learn more about the Pilot Program, or the DOJ’s other voluntary self-disclosure and whistleblower rewards programs, please reach out to any of the authors or your usual DLA Piper relationship attorney.