I think you're certainly in the free to keep the money, but honestly I would just give it back since you haven't really incurred any expenses by waiting. If you already had a few cash-in-hand buyers it seems likely that they would still be interested, or that others would be in the future. So again, I think you could keep the money but it seems to me (and probably him) that since goods never exchanged hands you're just keeping the money because you can. Oh and WRT the legal issue, he may not have a leg to stand on, but that doesn't mean he can't make things a hassle for you. I'd just give it back and put him in the rear view mirror.
Btw, what email are you using? If it's not his AF email account, send me a PM with his full name and I'll get you his work email so you can harrass him there. Good thing with doing it there is that if it ever came to a JAG situation the evidence would be conveniently on the AF's network.
Good luck!
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