The problems with whistle-blowing: U.S. v. Wailly


  • Frederick V. Malmstrom

    1. U.S. Air Force Academy and University of the Rockies
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    • Frederick V. Malmstrom received his BS from the U.S. Air Force Academy (1964) and his PhD in experimental psychology from Oklahoma State University (1979). He taught psychology and human factors engineering at both the Air Force Academy and the University of Southern California. In 1990 he retracked as a clinical psychologist, specializing in forensic psychology, now holding licenses in Ohio and Colorado. Malmstrom presently holds positions at both the U.S. Air Force Academy and as adjunct faculty at the University of the Rockies. He may be contacted at


Whistle-blowing is traditionally a dangerous, unequal activity that pits the individual against his or her own organization. The author examines the 1975 U.S. Air Force Academy embezzlement case of U.S. v. Wailly, including the reluctance of numerous parties who allegedly disregarded advance warnings about Major Louis F. Wailly's criminal activities, as well as the subsequent organizational fallout from the affair. Survey data from 2,600 service academy graduates from 1959 to 2010, and a Volunteer Contribution Mechanism (VCM) experiment with 72 cadets discount the conventional wisdom that whistle-blowing and loyalty are necessarily moral tradeoffs. Whistle-blowing as a model of the suboptimal Nash equilibrium is also examined.