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Talk to a lawyer immediately. Now, this doesn't mean you need to go out and hire the most expensive firm you can find; be reasonable and talk to a few different firms and really utilize any free initial consultations. Stop communicating with this person about anything legal until you have gotten counsel. I mean, if this person brings up legal matters, just tell them you can't talk about it. Don't offer any more deals. Definitely, do not do anything at all to make it seem as if you admit wrongdoing. Again, talk to some lawyers and do not have any more conversations with the person about possible resolutions, deals, etc without getting consultation. Don't let the other party know anything about what you are planning. Perhaps you can file some sort of suit, at least file a complaint that may make the person give up and go away, which is what I think you really want. He can't force you to come up with 400K in 7 days. He'd have to file a complaint, you would need to get served, and then you'd have time to respond. From that point, you can file all kinds of things. Don't be scared or emotional, get off HN and get to the calling law firms. Cheer up, people like this usually lose. :)

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