Sometimes you just know that people try to fool you. You are completely aware of the situation on hand and you have all the information but still the other person is openly saying something else. When that person is trying to defend his behaviour with this false information you have really caught him stealing.
How to react in that kind of situations? Well, it is a tough choice. You can choose to openly discuss it and break open his lies in public. This will make the person realize that you have got the edge on him and he will probably be more discrete in future situations. Another option is to choose not to give any hint. You let him go but you have come to know that you cannot trust him. In future situations, you will see his scams from far away.
As long as this person does not attack you in person the second option is viable. But in general I believe that openly reacting to his words is the best option. I believe that you should not tolerate behaviour like this towards yourself.
Bottom line: speak up!