Having just replied to one of your other threads about ethics questions…I'll say my answer here would be a bit different, as employee, vs. outside consultant (tax, audit, etc.). In tax and audit, client privilege protects you to some extent, but as an employee, you don't have that.
I read a wonderful book about the WorldCom demise – “Extraordinary Circumstances: The Journey of a Corporate Whistleblower” by Cynthia Cooper, the Director of Internal Audit at WorldCom. In her situation, she had to report to outside entities (I believe starting with the Board, and then pushing to the SEC, if I remember right). And…the accountants who had booked the fraudulent entries ended up in jail, despite the fact that they had clear evidence – including testimony of boss – of being ordered to do so by their boss. Granted, this was a huge case; they had to have heads roll to seem to bring some restitution to the people who lost money through it. But…I would expect the result would be similar for an employee in a smaller thing who was involved in fraud, with the excuse “my boss told me to” – it doesn't matter in court.
So, if my employer was involved in something too shady (like laundering money), and I was aware of it, I would quit/seek other employment, while assessing what options I had to report what was going on. Telling someone who's in on it won't help anything (from your example of close connections everywhere), so it might take some work to find someone who would have jurisdiction and also be able to make a change. But, I would get out of there ASAP to save my own hide, while working to find somewhere I could report it to so that justice could be served.
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