A long time ago I was set up by a fellow employee in the same sort of way. I didn't have any recourse, and just had to take it, and eventually lost just about everything. My boss, who was also fooled, eventually came back to me, apologized, and got my career back on track, but I have to tell you that it's one of more depressing episodes of my life. Maybe I should have sued the employee who did it, but in the long run, it wouldn't have brought back the time I had lost. So my message to the boss in this story is to be very, very careful.