If you have an HR manager, make sure they're well aware of what's going on and possibly have them in the room. Talk to the HR person first to just make sure of things that can and cannot be said. Have someone on standby in case of issues. Be prepared to have them moved out immediately and have their computer locked down. A bad employee is a bad employee and that costs companies money. He's apparently been given chances...probably more than I'd be willing to give. It's no easy thing to do, especially given the time of year. But sometimes life is tough. 38 years old is pretty far along in one's professional career to not know how to perform one's job as a professional.
While this is true, a malicious person might take them to court (knowing that he has no evidence) with the sole purpose of trying to cost them legel fees/time or to settle with him, giving him money. This is why it's still important to protect yourself as much as possible.
