for cause, and you have a 3rd party (police) that is providing you great cover.

If you hold onto this guy, he could cause you serious liability. You have much more liability keeping him than you do firing him.

It seems you don't want to lose his good work and you are trying to justify keeping him because he does work. I get that feeling, but its short-term driven. You can find someone way better that won't be a liability and culture killer.