Ok.
But before I process that...
Why the heck didn't you just try persuading them that this was the right thing to do? If you are promoting this good guy ethic, don't you think trying to convince these people to look at a bigger picture advances your general life goals better than engaging in deception?
Xeth is such a bad bug! *rips heart out in shame*
Meh, sounds better than lying to everyone. Though, for the record, none of us possess the Persuade skill...except for Vera-Kin, who has a skill of 9. You get a Force cookie for being entirely too useful, Vera.
In that case!
Xeth would like Vera-Kin to persuade that the man helped them crack the smuggling operations, and that it would be the right thing to do to let him off the hook for his helpfulness and honesty.
Vera-Kin will greet the authorities while Xeth keeps the man with us.
"Hello," she says with her cheerful demeanor returned after the man submitted to Xeth. "I am Jedi Master Vera-Kin, and I wish to discuss the happenings here.
"We uncovered a smuggling operation here that pushed through parts and equipment- nothing illegal in those, mind you- disguised as shipments that would cause them to pay lower taxes and get better prices for their parts. We are working out who their supplier is, and that should be left to us, but all you need to do is arrest everyone involved...except one."
Vera-Kin waves her gnarled cane at the man in question.
"He has been helpful with regards of cracking this smuggling operation, and we would appreciate if you would let him off with a warning rather than an arrest, for his honesty has revoked him in our eyes. The right thing to do, it would be."
"He will not talk if he is taken into custody," Vera-Kin says. "It is the right thing to do because he is willing to help us finish this smuggling operation, and his honesty is highly appreciated by us. All you need to do is shut down the operation and round up those involved, but you can't do it if he doesn't talk."
"No, you will not," Vera-Kin says. "You have no idea on what scale this is. The smuggling operation was here, but the Jedi are tracking something much bigger than you know. We need him to be immune to this arrest or this will happen again in other systems, and continue to happen here, no doubt. If you set him free, then we will be able to stop all attacks by the Cult on Alzarius. It's that simple."