As long as your witness can write down what was said or testify on your behalf, I don,t think you have anything to worry about. No lawyer is going to take his case, because he doesn't have a case. Write him a check for the agreed upon amount and write on it paid in full. If he accepts it, then I believe the case is closed. Maybe some lawyer will chime in here and correct us if we are wrong.
Trying calling your state attorneys office and get some advice. Tell them you think you are being scammed, and you believe he has done it before. Maybe the IRS will want to know some details about his business practices, and whether he is going by the rules. Offer your check to him with several witness around and note his response. Video this if possible.