Contractor that took money, did no work. Now wants to bill me for plans he supposedly had drawn up.

Went thru Servicemagic.com to locate a contractor to do an in-law suite on my house. Contractor did presentation, gave us estimate. My mother wrote him a check for $27,500 on Aug 24. He never did any work on the site, submitted my drawing to the township for permits... of course they said "NO". Now we asked him to return the money, he's claiming he had electrical and plumbing schematics done, and wants to deduct this from the money we gave him. We never settled on a floor plan, the only one ever done, was done by me.
What is my recourse? He said he can't pay the money back, til he gets paid from 3 jobs he's finishing. Basically, he used my Mother's money to bankroll some of his jobs, while he made us wait a month and a half. He had promised over and over, he would start "next week". But next week, always turned into another week...
He has her money, and we're at his mercy basically... The police called him, but other than that, they won't get involved. The township won't help, basically they keep telling me it's a civil matter, and to get a lawyer. Isn't this fraud, or theft by deception? - Is this your question? Add additional information