Buy an established site in a similar niche / aged domain with content vaguely relevant to what you're doing, 301 it and build links to that in a manner which is less "white hat" if you can't risk it.
If the friend is doing what you're doing, you've got to be one step ahead of them and start doing things which'll be harder for them to trace.
Also - every minute you spend worrying about your competitor (they're not your friend anymore) is a minute you've spent worrying and not making progress, whilst they build their business.
Keep doing what you've always done, and step up your game wherever you can, and forget about them.
[ alternatively:
Castor oil plant - Wikipedia, the free encyclopedia ]