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Robert Morgenstern, a new and inexperienced manager of a recently created internal audit team in a federal agency, tries to salvage an unsatisfactory employee and fails, with an unexpected resulting problem for himself when he tries to ease the employee out of the job: the employee goes to the FBI with allegations that Morgenstern has suppressed an audit report. The case details Morgenstern''s problems with the employee and his initial actions, beginning with a negative performance appraisal, to move him out of the job. The sequel describes Morgenstern''s continuing efforts to document the employee''s unsatisfactory performance. Before termination proceedings reach the hearing stage, however, the employee finds a job with another agency. This case is an excellent vehicle for getting new middle managers to think through the details and consequences of various approaches for dealing with unproductive employees. The case also provides the basis for a discussion of how to handle the situation when the employee involved becomes a ''whistle- blower''. The sequel poses further questions about the ethics of settling a problem in one agency through transfer of the employee to another agency.