United States Attorney Martin Estrada Announces Implementation of New Whistleblower Pilot Program to Facilitate Increased Prosecutions of High-Level Wrongdoers

Policy Encourages Individuals to Disclose Criminal Conduct in Order to Avoid Prosecution

To encourage early voluntary self-disclosure of criminal conduct and to promote effective enforcement of criminal laws, the United States Attorney’s Office for the Central District of California (“CDCA”) has implemented a whistleblower pilot program applicable to circumstances where an individual discloses to this Office 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.

Specifically, in such circumstances, this Office will enter into a deferred prosecution or non-prosecution agreement in exchange for the individual’s cooperation where the following conditions are met:

1. The misconduct has not previously been made public and is not already known to CDCA or to any component of the Department of Justice (“DOJ”);
2. The individual discloses the criminal conduct voluntarily to CDCA and not in response to a government inquiry or obligation to report misconduct to CDCA or any component of DOJ or regulatory agency, and prior to imminent threat of disclosure or government investigation;
3. The individual is able to provide substantial assistance in the investigation and prosecution of at least one equally or more culpable persons, did not play a leading role in the disclosed conduct, and is prepared to cooperate fully with this Office in its investigation and prosecution of the disclosed conduct, including by providing testimony if requested;
4. The individual truthfully and completely discloses all criminal conduct in which the individual has participated and of which the individual is aware;
5. The individual is not (a) a federal, state, or local elected or appointed and confirmed official; (b) an official or agent of a federal investigative or federal law enforcement agency; or (c) the chief executive officer or equivalent, or a person who otherwise exercises primary control (regardless of title) over the operations of a public or private company; and
6. The individual has not engaged in any criminal conduct that involves (a) the use of force or violence, (b) any sex offense involving fraud, force, or coercion, or a minor, (c) any offense involving terrorism or implicating national security or foreign affairs, and (d) does not have a previous felony conviction or a conviction of any kind for conduct involving fraud or dishonesty.

Considerations for a Discretionary Non-Prosecution or Deferred Prosecution Agreement

Where an individual discloses information to this Office 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 concerning federal, state, or local bribery or fraud relating to federal, state, or local funds, but does not meet the requirements set forth above, prosecutors may nonetheless consider, with
supervisory approval and consistent with the principles set forth in the Justice Manual, exercising discretion to extend a deferred prosecution or non-prosecution agreement in exchange for the individual’s cooperation. In evaluating whether such an agreement would be in the public interest and necessary in the particular case, prosecutors and supervisors should consider, among other things, the following factors:

1. Whether and to what extent the criminal conduct had previously been made public or was previously known to CDCA or to any component of the DOJ;
2. Whether the individual disclosed the criminal conduct voluntarily to CDCA and not in response to government inquiry or reporting obligation to CDCA or any component of DOJ, and prior to imminent threat of disclosure or government investigation;
3. The extent to which the individual is able to provide substantial assistance in the investigation and prosecution of at least one equally or more culpable persons, and the individual’s culpability relative to others;
4. Whether the individual has truthfully and completely disclosed all criminal conduct in which the individual has participated and of which the individual is aware;
5. The extent to which the individual occupies any official or leadership position or other position of public or private trust;
6. The adequacy of non-criminal sanctions, including but not limited to remedies imposed by civil regulators; and
7. The individual’s criminal history.

Evaluation Process

The First Assistant United States Attorney, Executive Assistant United States Attorney, and the Chief of the Criminal Division will evaluate disclosures received pursuant to this policy, in consultation with appropriate supervisors. In the event the Office makes an initial determination that a reporting individual appears to be eligible or should be considered under the discretionary portion of the policy, you will be contacted.