You shoudl seek out and retain an education law attorney immediately. Your question is too in depth to get a quick answer here and you should not post any more information because all of this is discoverable (that is, you might need to turn it over as part of litigation if asked.) It does not sound like extortion on the surface, though, because they have at least some claim for what they are demanding.
Please mark answers you appreciate with positive feedback!<p><a href="http://www.msm-law.com/nicholaspasse.html">Attorney Nicholas J. Passe</a><p><l>Disclaimer: Per the avvo.com community guidelines, no attorney/client relationship is created by the asking or answering of questions on this web site, nor do the answers constitute legal advice. Always hire an attorney before making any important legal decisions. Posting details of a case on avvo.com may be subject to discovery in criminal or civil litigation, so erring on the side of nondisclosure is wise.<p><a href="http://www.msm-law.com">Moen Sheehan Meyer, Ltd.</a>Ask a similar question