Protections Fall Short of Dodd-Frank
and Best Practices
Advocates Request Meeting with Attorney
General Merrick Garland
and Deputy Attorney
General Lisa Monaco
WASHINGTON, Aug. 1, 2024
/PRNewswire/ -- Today, the U.S. Department of Justice unveiled
the framework for its new whistleblower award program focused
on compensating whistleblowers who report financial frauds
resulting in asset forfeitures.
Stephen M. Kohn, founding
partner of Kohn, Kohn & Colapinto and Chairman of the
Board of Directors of the National Whistleblower Center,
stated:
"The DOJ missed the target. They failed to follow the proven
best practices of the Dodd-Frank and False Claims Acts by not
making awards mandatory to qualified whistleblowers who risk their
jobs, careers and even lives in the public interest."
"Whistleblower rights must be enforceable, not left to the whims
of political officials and special interests. All prior
discretionary programs have failed due to inherent prejudices
against whistleblowers. Given the failure of the DOJ program to
require awarding compensation to fully qualified and courageous
whistleblowers, this program will likewise fail."
"In addition to denying whistleblowers any enforceable right to
obtain an award, the program places severe restrictions on
whistleblowers who may have participated in the misconduct. This
denies coverage to the vast majority of informants who have the
best information documenting fraud. It fails to follow
the wisdom of the False Claims Act, signed into law by President
Abraham Lincoln in 1863. The
drafters of the False Claims Act understood that awards were
necessary to induce insiders, who may have participated in the
frauds, to turn on their fellow fraudsters."
"Whistleblowers should not solely rely on this new program
because of its significant defects. They should instead continue to
utilize the highlight effective, Congressionally-authorized,
whistleblower protections afforded in the AML Whistleblower
Improvement Act, Securities Exchange Act, Commodities Exchange Act,
Foreign Corrupt Practices Act, IRS tax whistleblower law, and False
Claims Act."
Given the significant potential of the new program to assist in
the detection and prosecution of fraudsters, the National
Whistleblower Center and its whistleblower-law experts are
requesting a meeting with the Attorney General and Deputy Attorney
General to explain how the current framework of the DOJ program is
highly problematic and to outline what reforms are necessary to
have it comport with the effective procedures in other
whistleblower award laws, such as Dodd-Frank and the False Claims
Act.
Based on the Department of Justice's framework of the
program, below is a scorecard tracking the inclusion of proven best
practices:
Best
Practice
|
Included in DOJ
Program?
|
Consistent with Highly
Effective Dodd-Frank
Act
|
NO
|
Confidentiality
Guarantee
|
NO
|
Anonymity
Guarantee
|
NO
|
Mandatory
Award
|
NO
|
Minimum 10%
Award
|
NO
|
Maximum Award Not Less
than 30%
|
NO
|
Dedicated Whistleblower
Office
|
YES
|
No Blanket Exclusion
for Participants in
Misconduct
|
NO
|
No Blanket Exclusion
for Minimally Culpable
Whistleblowers
|
NO
|
Program Consistent with
U.S. Strategy on
Countering Corruption
|
NO
|
"The program gets a grade of 10%, a failing grade," Kohn
added.
During the DOJ's 90-day sprint to develop the program, Kohn met
with the DOJ team which drafted the program and submitted
written comments to the DOJ during its policy sprint. He also wrote
a number of articles outlining what the DOJ would need to
do in order for the program to be a success.
Kohn, Kohn & Colapinto and the National Whistleblower Center
also played a leading role in wider efforts to make the DOJ aware
of the need to implement a Dodd-Frank style program. This included
submitting a letter signed by 24 NGOs from more than a dozen
foreign countries, an email campaign resulting in over 12,000 email
messages sent to the government officials, and an article by KKC
attorney Allison Herren Lee, a
former SEC Commissioner with years of enforcement experience,
published in the Harvard Law School Forum on Corporate
Governance.
Please contact Geoff Schweller at
geoff.schweller@kkc.com to be connected with Mr. Kohn for
further comment.
Contact: Geoff
Schweller
geoff.schweller@kkc.com
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SOURCE Kohn, Kohn & Colapinto LLP