bluebicycle, I'm not sure what could help stop your sister from saying such things. I can tell you that if she was my daughter, I'd likely tell her that I love her, but I detest her behavior and that she'd better stop that nonsense. At some point she will have to be told that, by someone.

Does she have a personality disorder, by chance? Or if something else, she really needs some therapy. Preferably with some family input.