In the first major public comment about white collar crime in more than a year, the Department of Justice (DOJ) called for an increase in compensation for whistleblowers under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). Senior DOJ officials, in three separate speeches, appealed to whistleblowers to come forward with information about crimes and suggested that compensation levels were too low to entice executives in the financial industry to report wrongdoing.
Attorney General Eric Holder, while speaking at New York University, suggested that Congress increase awards in cases involving banks and financial institutions. Under current law, FIRREA caps whistleblower awards at $1.6 million. Holder noted that under the False Claims Act (FCA), tipsters who provide information to law enforcement concerning wrongdoing can receive compensation at a level of 25 percent to 30 percent of the recovery received by the government.
Holder cited that in an industry that included a collective bonus pool of $26 billion and a median executive pay of $15 million, a “paltry” windfall of $1.6 million is “unlikely to induce an employee to risk his or her lucrative career in the financial sector.” Holder suggested that increased awards could improve the DOJ’s ability to gather evidence of wrongdoing “while complex financial crimes are still in progress — making it easier to complete investigations and to stop misconduct before it becomes so widespread that it foments into the next crisis.”
Holder’s speech was part of a three-pronged offensive launched by the DOJ yesterday concerning white collar criminal prosecutions. Deputy Assistant Attorney General Marshall Miller also spoke to a group of corporate lawyers in New York City. Miller’s comments underscored the importance of obtaining cooperation in investigations of financial fraud and the risks of not fully cooperating with authorities. Miller also suggested that “proactive investigation tools” used previously in organized crime and drug cases, such as wire taps and surveillance, have become the staple of white collar investigations.
In Washington, D.C., Leslie Caldwell, head of the DOJ Criminal Division, while speaking to a group dedicated to advancing the interest of whistleblowers, encouraged counsel to “reach out to criminal authorities in addition to seeking monetary penalties through civil lawsuits.”
Holder’s comments came near the six-year anniversary of the collapse of Lehman Brothers. The DOJ is under continuing criticism that the DOJ did not aggressively pursue criminal charges against executives who contributed to the 2008 financial meltdown.
Holder also called for hiring additional FBI agents to conduct white collar investigations. He cited the need for expertise in specialties such as forensic accounting and called for additional resources for the FBI to conduct complex and often far-reaching investigations.
Though Holder’s comments focused on the future of white collar criminal investigations, it is unlikely that Holder will lead the DOJ to effectuate these changes. He has signaled that he will step down as Attorney General by year-end.
