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I'm Lucy, and I'd be happy to answer your questions today. I'm sorry to hear about your situation.
It's not extortion, it's a settlement agreement. A settlement agreement is a contract stating that one person will do X if the other party does Y. It's never valid unless both parties sign it, because it's a contract. A one-sided contract carries no legal weight. You're not threatening to harm her if she doesn't sign the agreement. It doesn't say that you get to keep the $65,000 if she doesn't sign. All it says is that her signature is the triggering event that requires you to return the money. If she had refused to sign, then you would've been able to either keep negotiating or the judge would've decided how to deal with that money. There's nothing illegal in what you've said.
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