does this 4 yr old have sexual issuues

Idk what to do ..I have caught my friends 4 ye old doing sex acts to my almost 3 yr old son..the first time he took his diaper an pants off next he had him pinned down with his pants off rubbing his penis in my sons face.now tonite they were playing in room door closed an we thought they were just fighting customer my son was screaming crying no so when I went in the boy was standing there an I asked him where my son was he said under there can u um please go back outside..I looked under bed an seen his pants an diaper off so I went told his mom he's being nasty again she flung open door an he had him on floor looked like he was trying to suck on it!! I was horrified!! But they enter do nothing bout it just talk to him an tell him to appologise
.I'm pissed what do I do..an he's family he's my husbands brothers wife's kid..help advise please