I understand, however, if you can prove you created/authored the work investors would be foolish to risk their money. You will need to respond to the "legal letter" and indicate that you own the copyright to the artwork and other creative material. You should start collecting any and all material to establish your creation of the artwork. This includes early renditions of drawings, failed drawings, letters, memos, notes that will establish you as the author/creator.
As far as the game, you may want to start looking at patent protection. Copyright protects printed works of artistic expression.Games, however, have virtually no coverage under US Copyright Law. Per the copyright office: Copyright does not protect the idea for a game, its name or title, or the method or methods for playing it. Nor does copyright protect any idea, system, method, device, or trademark material involved in developing, merchandising, or playing a game. Once a game has been made public, nothing in the copyright law prevents others from developing another game based on similar principles. Copyright protects only the particular manner of an author's expression in literary, artistic, or musical form.
Material prepared in connection with a game may be subject to copyright if it contains a sufﬁcient amount of literary or pictorial expression. For example, the text matter describing the rules of the game or the pictorial matter appearing on the game board or container may be registrable.
You should contact a patent attorney and get a provisional patent filed as soon as possible. Patenting the game concept is much more important than the artwork which can be revamped to fulfill the game objective. While you friend is worrying about a copyright you should start protecting the game itself. You can not only patent the game but patent trademarks around aspects of the game that are unique.