Discussions

So, I'm curious. I'm kind of wondering how many people out there have 1 (or more) of those people in thier circle, who are "fake".  
 
Now I have known for a long time that there is for sure 1 person in my circle of friends who is like this.  
 
This person very much wants to be in the know when the juicy stuff is going down, Likes to put themself in the middle of stuff so they can run back and forth playing both sides to try to be a hero or savior. This person will twist things to make stories better or more interesting.  
 
I guess what I'm curious about is how do YOU deal with those people when they are in your circle?  
Myself for the most part I have ignored it. I didnt want to make the person feel stupid by letting them know i caught them in thier lies, so I ignored or "let it go". Am I making a mistake by being the bigger person?