investigate, and sometimes the duty of confidentiality doesn't cover ongoing criminal behavior.

Now, if it isn't really "fraud" but only a dispute in how the contract terms can be construed, then law enforcement is less likely to open a case, and the duty of confidentiality may prohibit the disclosure. But I would have to be sure about those things before I neglected to report a situation like this, especially where it looks like I could've been using my relationship with both clients to help swindle one and gain a cut of the ill-gotten gains from the other.

I mean, my first thought was, "Consult with an attorney about how best to report this to police so they know from the start that you're innocent and they can't prosecute you even if they start to suspect you," but then it seemed like he wasn't even concerned that it was a crime after talking to his attorney, so I thought maybe they were just throwing around the term "fraud" in a non-criminal law way.

Too many unknowns from the post than to say more than "take this situation very seriously and talk to your attorney about what you need to do."