Re: High level power abuse
This is a very uncertain situation. IMHO, you must choose what kind of role, if any, you wish to have in this situation. You have been involved through happenstance, and if you purposefully involve yourself then you can play the role of friend and confidant - with your female friend for sure and with your Sensei if your relationship is of that level. Also, and this seems to be your concern, you may address Sensei as a member of the dojo who is concerned for the well being of the dojo.
Both people must know that their actions would be disruptive if discovered (which they have been - but to what extent?). Your Sensei may need to hear that the secret is out, and be reminded of the instability that this will bring to the dojo.
If your main concern is truly for the dojo, then ultimately all that you can do is to excel and help to make the dojo the best that it can be. Make the decision, lead by example, and don't look back. We all have our choices in life. Best of luck to you.