Federal issue. Entrapment Defense.

From what you first state, you discovered and then immediately reported fraud. You are now charged with a criminal offense, Whether the government can prove its case against you, your defenses, (including entrapment) strategy etc, is something that should be discussed confidentially with a criminal defense attorney. While it is always tempting to try and offer an opinion, it does not mean much without knowing many more if not all the facts.
Also, its really not in your interest to discuss the facts of a crimnal case in an online forum. If you are in the Los Angeles area, you can most likely find some experienced federal criminal defense lawyers locally. Good luck to you.

Entrapment is a difficult defense to prove. Based on your statement, I don't know if it applies.
If you did not know that your employer was committing fraud and reported it as soon as you found out, that is probably a better defense to the charges. Most fraud charges require the specific intent to commit a crime; if you were participating in good faith without knowing it was a scam, that could clear you.
However, this isn't some do-it-yourself project, like fixing a leaky faucet, that you can handle with a little advice you got over the Internet. You need a lawyer; if you can't afford to hire one, you are entitled to a government-paid attorney and the judge will appoint the Federal Defender.
Entrapment doesn't occur every time an agent of the government gives somebody the opportunity to commit a crime; it's when the government exerts so much pressure that a person who wouldn't otherwise commit the offense would agree to do it.
If your former employer wasn't working for the government when he enlisted you, his actions would not be on behalf of the government and it would not be entrapment; however, if he encouraged you to continue after he was working for the government, that could be entrapment.
For instance, undercover narcotics agents conduct operations all the time, where they pretend to be buyers or sellers, and bust suspects for drug transactions.
One of the most famous entrapment defenses was John DeLorean, who developed the original Pontiac GTO for General Motors, then went on to establish his own car company in Ireland. The stainless-steel DeLorean sports car may be best known as the basis for the time machine in Back to the Future.
DeLorean's company was in trouble, and a former cocaine smuggler working as an FBI informant approached him with an "investment opportunity" that turned out to be a drug deal. The informant and other FBI undercover officers met with DeLorean over several months, and he was finally arrested. A jury found him not guilty.
Please understand that this is a general discussion of legal principles by a California lawyer and does not create an attorney/client relationship. It's impossible to give detailed, accurate advice based on a few sentences on a website (and you shouldn't provide too much specific information about your legal matter on a public forum like this, anyway). You should always seek advice from an attorney licensed in your jurisdiction who can give you an informed opinion after reviewing all of the relevant information.

As others have pointed out, this is a serious matter. The fact that it appears to involve a large amount of money and potentially complicated deals means that it is quite beyond the ability of an ordinary person to work this out on their own. Regardless of what advice you receive here, it would be foolish not to retain a criminal defense attorney to help you through this.
Entrapment only occurs where the government or its agents apply enough pressure to get an otherwise law-abiding person to commit an offense. It doesn't typically apply to people who already have a propensity to commit those offenses. There are not enough facts about the timing of the CI's involvement with the government or details about what the alleged conduct was to tell whether there was any entrapment.
Entrapment is also what we call an "affirmative defense" which means you may be conceding that your conduct was otherwise illegal. A good defense attorney might not be willing to concede that much and might start looking at your conduct in reporting the offense to show that you did not have the required intent.
The bottom line is that you need an experienced criminal defense attorney immediately.

Talk to an experienced federal criminal defense attorney, preferably one who has prior experience as a federal prosecutor (AUSA) or federal defender (AFPD). Sentences in federal cases are guided by the Federal Sentencing Guidelines. For white collar cases such as yours, the amount of loss is the most important factor. With the dollar amount you cite, you are exposed to *significant* prison time if convicted. And, as someone else pointed out, do not discuss the details of your case in a public forum like this one.
Email me and I can recommend some good attorneys in LA for you.