GRC-- You are NOT stupid. People like that study up on all the ways to get around your good sense. You will have a much better bullshit detector now. And by raising the issue, even without naming names, you have acted responsibly; someone may have a better chance of avoiding this.
As for the guy-- you will be found out eventually by the person you are taking up with now. Why not be a class act and let her go before you break her heart, too?