Is it illegal? No. Can it cause probelms? Yes. Here is why. What we are talking about is "tortious interference with contract", which is a civil doctrine. She can go after you civily alleging that you are interfering with her contractual relations. Even though it is true, it is still interference.
This is a little different from defamation, which is something else she can try. As you aptly note, you have a defense, which is truth. Truth is the classic and best defense against defamation. The fact that these arrests are public record would help you. It would be better, however, if the customers found out from someone else.
The other aspect is that if she has a DUI and marijana convictions, it looks like she has a problem. That means she will likely self destruct on her own, given some time. She showed you the ropes, so it might not be the nicest thing to do, going after her. You left for a reason, which may be indirectly related to her problem. However, your life might be simpler, better and easier if you do a quality job with a quality product, show up everyday and perform. In time, you should win out anyway. Might be a better route.
So to answer your question directly, again, there are issues of totious intereference. Whether she has the wherewithall to pursue such a claim is another issue. Only you know that. The last thing you want is a tortious interference case. That could blow up on you. They would also allege theft of trade secrets (not valid), but a case like that would hurt both your interests. Erego, your interests would be effected. Customers would not like it.
Maybe they will find out on there on Also, something else could happen. In this case, your best bet is to leave it alone and win out with a better paper.
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