Agreement with much of what's been said above. You're going to continue to get caught in the crossfire of a no-win situation. If the business is going to the devil because they're not focusing on it, you'll be out of a job soon enough anyway. Falsely accusing someone of stealing is *not* pettiness; it's a serious ethical lapse and/or suggests paranoia.

It seems clear that he's dying to get rid of you, by whatever means necessary short of outright firing, 'cause he made such an j-*ss of himself in front of you with the mistress, the coming back, etc. He's probably hoping to make you so uncomfortable, annoyed and stressed out that you'll leave of your own accord. That's fine. Do it. But do it as much on your own terms as you can.

To the degree you can manage it, ease out of this situation with as few fireworks as possible, not only to maintain some sense of control over your stress level, but because Boss Man sounds volatile and vindictive. For your protection, you should keep a written log of what you've been accused of---date, time, what was said, by whom, and if there were any witnesses. Keep emotion out of what you write---"just the facts, m'am." And keep your record off-site, at home or in your car or bike, where he can't snoop. And make sure none of your e-mails or documents on the office computer contain anything that he could use against you.

As appealing as the idea is of sitting them both down and trying to deal with the situation head on, this pair doesn't sound like they're capable of it---either in their relationship or outside of it. I'd focus more on damage control (meaning, damage to you).

Make sure that you remain professional in all your dealings AND document all incidents.

Maintain a good relationship with Boss Lady by not running to her every time he says something nasty---she'll tire quickly of refereeing. But keep her sufficiently informed that she remains aware of what he's doing. His behavior *should* make her think twice about his value as a business partner, not to mention life partner!

Keep your own perspective as broad as possible by spending time with other upbeat people outside of the workplace. Remember: These are just two people out of thousands you're going to meet in the course of your life. Two years from now you'll barely remember them, except as cartoonish characters.

My two cents'!! Good luck! Get outta there!