I wonder how your mate would feel if he knew his friendship with you was being debated on an internet forum. If I was him, regardless of what I had done, I would be walking away.

As said above, without knowing this guys crime (morally or legally), then none of us can really give an opinion that you could justify using, when deciding whether to ditch said person or not.

That said, I think maybe you should just give them a slap but stay friends.