Personally, I'd take the respect of fellow writers over the money. Then again, I've never been that driven by acquiring money--obviously--and what's money going to do for you when your writing community thinks you stink?
Okay, so he tried to sell it as fiction but the publisher said, Well, you say this is a memoir with a bit of embellishing? Let's make it a memoir, then--it'll sell better, so he does, he takes their advice, which is not always the best, admittedly, he gets sucked in, and then lookit.
At some point, you just have to stand your ground. Just say no, right?
But he's sold more books as a result of this fiasco, which I find repugnant. It figures. Our culture is currently so very celebrity-driven. Designer cars, designer clothes, designer books.