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I certainly hope your attorney has cross-complained against this guy. I've been where you are in my position as owner of several small businesses. It was one attempt at legally sanctioned extortion after another, often with the Government acting as the instigator and financial supporter of the Plaintiff (a la EEO type fabrications).

Nothing will change until the legal system is reformed, permitting recapture of actual expenses and punitive damages against those who engage in frivolous, meritless lawsuits. As it stands now, the initiator of a lawsuit has nothing to lose and may gain a quick settlement simply by finding an attorney who can assist in filing the action or, if he can't, going to the nearest Gov't office where he will find all the support he needs irrespective of the merits.

Best of luck!

Since he has a criminal past, I think you should get a hold of the State Attorney General's Office and let them know what this criminal is doing. Maybe they can step in and threaten to prosecute him for previous offensive if he continues with this lawsuit at which time you can sue him for pain and suffering of a lawsuit that was frivolous or unjustified.