Tell your parents or other responsible adult. At best, he is misguided. It is inappropriate for him to approach you in this manner, so make sure you are only in his presence while there are other people around.
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Tell him in no uncertain terms that his fantasy or feelings must be stopped, explain to him that to continue would damage several innocent lives including extended family. Tell him how stupid this is and how he needs counseling. You will not take his calls or other contact and if this continues you will inform your spouse. Wait to see if his behavior changes and inform your spouse anyway.