Sometimes smart people do dumb things. Tell management how you feel about the dishonesty. Perhaps they could come clean to the potential client, and/or figure

Sometimes smart people do dumb things. Tell management how you feel about the dishonesty. Perhaps they could come clean to the potential client, and/or figure out how to make sure something like this never happens again. Depending on the structure of the company (it sounds like you might be in a small company) it probably is time for some people to go, or at least take some time off and figure out their moral compasses.