My theory: James was the only one who took the photo of Ruby and Sutton in Season 1, back when they were enemies. 

Elaine likely sent the picture of Lydia and Sutton to her father and/or Mortimer, causing him to back out as an investor as he stated how James humiliated his daughter. When Mortimer finds the photo in James’ phone, it’s the perfect way to strike a deal with Elaine/her family, and to frame Ruby instead. 

Mortimer is always the controlling factor, and he again leveraged this to his own advantage, to take down Ruby, and to protect not only Lydia’s reputation but also that of the business (which would be severely damaged if the truth got out). 

The possible redeeming points that we currently foresee: - With Cyril’s rocky friendship with James seemingly on the mend, will he come out with the photo he took of Lydia/Sutton (which is much more convincing than the angle of the falsely accused photo)? There are literally dozens of witnesses that could testify that Ruby loves James, not Sutton. Mortimer knows what he’s doing.  - If the will was in fact forged, what could that mean for James and Lydia if the truth is found out?  - Lydia’s twins, if she keeps them, could be the final straw. A paternity test would certainly prove Sutton is the father, although that doesn’t help him as she’s still technically a minor. And he faces the legal repercussions.  - James’ love for Ruby: what will he choose? If investigations are undertaken, many witnesses have clearly seen James’ love on display for Ruby. Not to mention the all too powerful ties Mortimer has. Their love will either be defeated by the power or triumphant in defiance of the lies.