It's not unreasonable. It may be stupid, but criminals do stupid things all the time. Someone has to be first. Turning the investigation over to the authorities to investigate is also reasonable.

What's disappointing is that his company didn't stand by him during the investigation, especially since he reported it.

To me that is actually grounds for OP to sue the employer for slander/libel/unjustified termination etc. OP did their part and the employer didn't.

Do you have a legal background? I don't; what I know about defamation law I mostly get from religiously following Ken White. This doesn't sound like an especially plausible case of defamation. If it helps: absent a contract saying otherwise (pretty rare) employers in the US can generally fire you because they don't like your new haircut.

(With the exception of firing you for protected reasons/classes, like race, gender, sexuality, etc.)

This just in: https://www.jdsupra.com/legalnews/hair-discrimination-the-ne...

It is not a smoking gun. Now if they find unique product obtained through a transaction it would be.