You have my sincere sympathies (and I have no clue what I would have done in your shoes; its one of those moments where clarity arrives in hindsight and self-ki

You have my sincere sympathies (and I have no clue what I would have done in your shoes; its one of those moments where clarity arrives in hindsight and self-kicking ensues and we've all been there) but you entered the spider's web as soon as you met with him outside of his office. He knew exactly what he was doing; you didn't. Live and learn. But lets be honest here: "Please check the legality of your proposed hiding of your proposal for our paying you to be our secret consultant and meanwhile I'll run this by my by the book partner"? (And I'm just a (sympathetic) fellow geek on HN; I'm trying to make a point regarding careless escalation of this matter beyond anonymous posts on HN ...) It is imperative that you consult a lawyer regarding this matter even if you and your partner's intent is to simply drop the sale cold, walk away, and cut your loses; call the FBI; go on Oprah; whatever. Get legal advice and mum's the word until you do.