> Apparently, both companies cared. Cared deeply. Hence the coordinated firing.

Seems like collusion, wage suppression, interference with business and interference with employment. I hope this guy sues the crap out of OP's company.

> If an employee says he's pulling 40h/week but he's actually pulling around 20h/week, if that, then the question of fraud is up.

If an employee is getting 40 hours of work done per week, then I don't see the problem.

> If this was supposed to be a non-issue, why go through so much trouble to hide it?

Because it's none of their business.