At this point it sounds like he doesn't want the files and just wants a refund. My response would be: "I'm sorry you feel that way. As per our initial agreemen

At this point it sounds like he doesn't want the files and just wants a refund. My response would be: "I'm sorry you feel that way. As per our initial agreement, the initial deposit is non refundable, and I will not be refunding any amount to you. Best of luck with the project going forward. Regards, Yourname" Ignore the clients bigoted rant, don't take it personally. He has shown a very unattractive side to himself. Make sure to learn the lessons of the failed project and move on.