The problem is that you can't just have what are effectively employees but on a contract basis under law. It opens you up to liabilities, as Uber has been experiencing.
The closest I think you could get is actually contracting a PEO that takes the individual under employee status and assigns them specifically to your company under contract. Being an employee of the PEO means that they can in fact control these aspects of the job, and you aren't contracting them, you are contracting the PEO who subs out to them.
This isn't actually even the root issue.
The contractor almost certainly violated their contract by sharing NDA-covered materials with an unauthorized third party.
The contractor also shared access credentials to the company's systems with someone else and then facilitated fraudulent interactions wherein one person claimed to be someone else.
Being a contractor doesn't give someone carte blanche authority to do whatever they want with the company's materials (codebase, design documents) and secured systems.
The law, nor the linked resource, stipulates that any 1099 relationship can be subcontracted out by anyone, let alone without disclosure. If that were the case the explicit option to hire onshore vs offshore on sites like Upwork would be meaningless, or a matter of arbitrage.