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SDNY Whistleblower Pilot Program Rewards Whistleblower Contributions

All News February 6, 2024

A new pilot program launched by the United States Attorney’s Office for the Southern District of New York may provide solace, and opportunities, for whistleblowers facing potential criminal exposure.  United States Attorney Damian Williams announced SDNY’s Whistleblower Pilot Program (the “Program”) on January 10, 2024.  Under the Program, whistleblowers who meet certain conditions may qualify to enter into non-prosecution agreements in exchange for voluntarily disclosing information regarding criminal conduct and cooperating with the government.

The Program applies to individuals who disclose to SDNY “information regarding criminal conduct undertaken by or through public or private companies, exchanges, financial institutions, investment advisers, or investment funds involving fraud or corporate control failures or affecting market integrity, or criminal conduct involving state or local bribery or fraud relating to federal, state, or local funds.”

Key conditions whistleblowers must meet to qualify for the Program include:

  • Disclosed misconduct is not public and not already known to SDNY;
  • Voluntary disclosure;
  • Substantial assistance and full cooperation in the investigation and prosecution of the disclosed misconduct;
  • Truthful and complete disclosure;
  • Whistleblower is not a: (i) public official, (ii) federal investigative or enforcement official or agent, (iii) person of major public interest, (iv) CEO or CFO (or equivalent) of a public or private company; and
  • Whistleblower criminal conduct and criminal history (e.g., no offenses involving force or violence, dishonesty or fraud, terrorism, national security).

If the SDNY determines that an individual whistleblower meets the requirements of the Program, the Office “will enter into a non-prosecution agreement.”  Furthermore, even if the whistleblower does not satisfy all of the qualifying conditions, SDNY has the discretion to “extend a non-prosecution agreement in exchange for the individual’s cooperation.”  Finally, the Program explicitly states that it is limited to SDNY and “does not apply to any other United States Attorney’s Office or any other litigating component of the Justice Department.”

Clearly, this Program’s promise of a non-prosecution agreement is welcome news for individuals who may be caught up in misconduct for which they face potential criminal exposure.  What is not clear at this point is how this Program will intersect with other incentive-based whistleblower programs and to what extent it will provide new recovery opportunities for whistleblowers.  For example, both the Securities and Exchange Commission and the Internal Revenue Service have programs where whistleblowers may recover significant awards based on the success of the government’s enforcement activity.  Each of these programs has issued significant awards to whistleblowers: the SEC’s most recent annual report states that its program has awarded more than $1.9 billion to whistleblowers since the program’s inception; and the IRS’ most recent annual report states that its program has awarded $1.1 billion to whistleblowers.  However, both the SEC Whistleblower Program and the IRS Whistleblower Program deny awards to whistleblowers convicted of criminal violations related to the conduct underlying their whistleblower claim.  See 15 US.C. § 78u-6(c)(2)(B) (SEC Whistleblower Program); 26 U.S.C. § 7623(b)(3) (IRS Whistleblower Program).   Similarly, qui tam whistleblower plaintiffs who bring False Claims Act actions on behalf of the government are dismissed and not permitted to receive any share of the proceeds from the suit under these circumstances.  See, e.g., 31 U.S.C. § 3730(d)(3) (federal False Claims Act).  The new SDNY Program raises, at least on its face, the potential for whistleblowers to (i) avoid criminal conviction through a non-prosecution agreement, and (ii) as a result, also avoid the recovery exclusions in other incentive-based whistleblower programs and statutes.

U.S. Attorney Williams described the Program as “a new tool in our toolkit that will enhance our 2024 enforcement efforts.”  It will be interesting to see how the Program develops, and whether it achieves its goal of encouraging early voluntary self-disclosures.  Of particular interest to the whistleblower community will be the practical application of the Program, including how it interacts with other incentive-based whistleblower programs.

Getnick Law is one of the nation’s preeminent whistleblower practices, having recovered more than $1 billion for the government and record awards for our clients.  Learn more about our Whistleblower Law and Litigation practice, including claims and cases brought under the federal False Claims Act, the New York False Claims Act, the SEC and CFTC Whistleblower Programs, the IRS Whistleblower Program, and the Anti-Money Laundering and Kleptocracy Whistleblower Programs.

To contact a Getnick Law attorney to discuss potential application of the SDNY Program, or any other aspect whistleblower representation, please click HERE.