I find this scenario strange. Why is your wife not interfacing directly with her brother? Why are you even involved in these discussions during this obviously challenging situation? It might be better to step back and support your wife and not insinuate yourself into the higher level aspects of the situation. You're only increasing the conflict. "Blood is thicker than water" is very true. And you just received a good lesson on that from your brother in law. Put your wife before everything else. If things get even worse you'll be the scapegoat at the end. Guaranteed.