A combination of compartmentalization and churn can keep the charade up for quite a while, and if executed well you can have a pretty big operation with only one or two people being in on it.

I figured something was off but there's a whole gradial spectrum of Schroedinger's Accomplices where most people can seem to be conners or conned.

For this reason, I found the documentaries on NXIVM (Seduced, The Vow) quite interesting - the way the protagonists are framed and how everyone seems to have plausible deniability even with all the video material.

I disagree with your moral conclusion - we all have responsibility as individuals with regards to what our work contributes to. This goes for anything from military personnel to software engineers. That you don't have legal risk doesn't mean you don't have ethical responsibility.

The following is probably just an already completely debunked conspiracy theory with zero basis in fact but what you describe is precisely how special compartmentalized intelligence works. Maybe many of the corporate and government organizations in security and intelligence operate in this siloed way, possibly at the risk of a lack of oversight and accountability which helps any abuses go unaddressed. Official secrecy oaths and classification perhaps compounds this vulnerability to misuse.

And except for the public heads very occasionally rolling, it's likely nobody takes responsibility (in a justice sense) when abuses occur. How do you get people to carry our these things? Simple finance, and isolation could be one way as mentioned. Coercive control via blackmail, planting evidence, fake accusations or intimidation could be other effective methods, especially when you need to secure the cooperation of key people outside the organization, and especially when your daily work involves intelligence collection and deception.

If it occurs at a deep level under the security and compartmentalization shields, then it's unlikely checks and balances could correct it if this sort of corruption was occurring.

When you read about iphone development Apple isn't that different. Only Jobs and a few other people knew the whole picture. The rest worked on their little area while not seeing the whole product.

Which is what Madoff did, I believe.