Well, you've pretty much gotten as far into it without giving us buddy's name.
Think of it this way..
You've informed us, many still serving and some who have served, that our beloved organization, something that many view as their family, is in the process of being misled by an unsuitable and undesirable element, who we will train/train with, serve with, and command.
I don't know what your aim was in posting about buddy. If you wanted to warn us, ask us what you should do, or wanted us to do something.
Basically, as far as you're aware, you have knowledge of someone committing a crime, and fraudulently applying for on a Federal application (he had to have lied to apply if he does what you say he does).
Someone correct me if I'm wrong, but isn't that an accessory if you don't do anything?
I don't think appealing to buddy's sense of propriety will work so this one of the following will happen.
A) he will be caught, wether by your assistance or without.
B) You will do what is right, report him, and you're without a friend (not much of a good one, seems), and the CF will be without an undesirable
C) He will get through, continue his criminal activity, and not be caught
C) He will be caught after scraping through training, and will have wasted THOUSANDS of tax-dollars, training spots where others who were of a better caliber were denied, and many many man-hours of training.
D) He will get through, and do something that endangers or takes the safety or life of a fellow member, possibly one of US, and you will have to live with that for the entirety of YOUR life.
You know what's right, and what's wrong. The ball is in YOUR court. Many here can help you if you make a decision that's tough, many can guide you, and you can always go through career manager. But it's up to you.
Either way, from this point, I don't think open-source is the way to go.
I'm suggesting a lock-up on this one.