That doesn't sound the least bit stupid, Guest/Girl. You obviously cared about him when you did all that for him, it would be silly to think that woudl just stop because he has done something awful to you. Do you have any other close friends who might be close enough to both of you that he or she could help in the matter? I does sound like your friend has a problem, and I can certainly understand why you wouldn't want the 'dirty' money - perhaps this other friend could make an effort to dissuade him without it seeming like an accusation for you.
I'm sorry you've been betrayed. I know the feeling, not from a situation like this, but that feeling of loss is always the same. I don't think you were completely wrong about him, though - he clearly feels guilty, he's not a complete bastard. A complete bastard wouldn't care if he'd taken someone's money, or if someone laughed at his jokes, either.