Feif – your point was that it’s OK to snitch if someone does something wrong. You are wrong.
Joseph is correct that it applies even when the law is broken.
Regarding the Deal incident that you bring up, you have no right to extrapolate from that psak you “heard” to the general case. Nor do you have the right to use such an extrapolation to rationalize your personal views that fly in the face of the Rambam.