US Attorney in LA starts program to encourage company, public institution whistleblowers

A pilot program to encourage people who know of fraud or other corruption by their company heads or bosses at public institutions "to do the right thing and receive a significant benefit" such as non-prosecution, was announced Friday by Martin Estrada, U.S. attorney in the Central District of California, the largest district in the country.

The Department of Justice announced a nationwide voluntary disclosure program last year encouraging companies to report their agents or employees.

But Estrada is aiming at the folks in charge.

"Note that this covers individuals who may themselves be involved in this conduct," Estrada said in a phone interview. "And there is an important carve-out for CEOs and equivalent."

The difference between this Voluntary Self-Disclosure Pilot Program and already existing avenues such as becoming a state's witness, is the offered benefit - stated in writing and accessible - to not be prosecuted at all.

"The presumption is actually a non-prosecution agreement or a deferred prosecution," Estrada explained, "assuming they disclose something voluntarily, and not in response to a government inquiry," provide substantial help in an investigation, are "reporting someone equally or more culpable and they are fully truthful with us."

Another advantage, he said, is that the bestowing of the benefit does not depend on an individual prosecutor. The policy is districtwide in the three-county area of 20 million residents, and decisions are made at the highest levels of his administration, Estrada said.

A principal condition is that the misconduct being reported is not already known to the Department of Justice, Estrada said, "and we are doing lots of investigations all the time."

He emphasized that the person must not be elected or appointed to any public office, nor an official or agent of a federal law enforcement or investigative agency, nor a CEO or equivalent, that is anyone who exercises primary control of a public or private company.

Other conditions: The individuals must provide substantial assistance in the investigation and prosecution of at least one equally or more culpable person; did not play a leading role in the misconduct; disclose all their own criminal conduct; and have not engaged in any crime of violence, serious sex offense, has no previous felony conviction or one involving fraud or dishonesty and has committed no offense involving terrorism, national security or foreign affairs.

The program, effective immediately, "stems from our focus on corporate crime, major securities violations and public corruption," Estrada said, "So we wanted to incentivize individuals to come forward, whether they be in private companies or institutions, to come to us at our offices and disclose that information and receive a significant benefit."

Other U.S. attorneys have voluntary self-disclosure programs, but Estrada said, "We wanted our program to not just focus on corporate crimes - that is certainly a major priority - but also focus on public corruption. That's been a major focus for us and we've had a lot of success."

Estrada added, "What I would hope is this would help root out corruption. ... so often, people in the workforce may not agree with something going on but don't have an avenue to come forward. They wonder 'If I did that I might have to go to prison.' We are creating a really strong incentive, a set policy, if you bring this to our attention and we weren't aware of it before."