I understand you being upset, but nothing you have said makes her crazy. Nothing you have said would be a reason for her not to have physical custody of all of the children. The father of the twins being 20 - well more and more it is acceptable for women to have relationships with younger men. That doesn't increase your son's likelihood of getting custody at all.
The courts are likely to give ALL of the children to the primary care taker. The courts do not like to split siblings apart.
He has to dispute paternity of the twins and he can file for custody of his daughter, but you have to understand the courts prefer to keep all children together. It is important he moves quickly about disputing paternity. Each state has different guidelines and some have very limited time constraints to do that.
Sorry, but it isn't fraud. If she had sex with both parties she had no way to know who actually fathered the children.
You need to support your son but you need to be calm. You aren't a party to this and you are only going to exacerbate their situation.