State Bar investigations sometimes find criminal conduct, but their primary targets are ethical violations reported by clients.  When you see or suspect a crime being committed, call law enforcement.  Even if you don't have a legal obligation to report, as you note there is a moral obligation.  "See something, say something" doesn't just apply to unattended suitcases at the airport.  

You're trying to meet a 1099 filing deadline?  Don't leave her hanging on that, but I would then end the client relationship.