NJ disallows blackmail, also called extortion. This is actually called Theft by Extortion under 2C:25-C:
2C:20-5. Theft by Extortion
2C:20-5. Theft by extortion
A person is guilty of theft by extortion if he purposely and unlawfully obtains property of another by extortion. A person extorts if he purposely threatens to:
a. Inflict bodily injury on or physically confine or restrain anyone or commit any other criminal offense;
b. Accuse anyone of an offense or cause charges of an offense to be instituted against any person;
c. Expose or publicize any secret or any asserted fact, whether true or false, tending to subject any person to hatred, contempt or ridicule, or to impair his credit or business repute;
d. Take or withhold action as an official, or cause an official to take or withhold action;
e. Bring about or continue a strike, boycott or other collective action, if the property is not demanded or received for the benefit of the group in whose interest the actor purports to act;
f. Testify or provide information or withhold testimony or information with respect to another's legal claim or defense; or
g. Inflict any other harm which would not substantially benefit the actor but which is calculated to materially harm another person.
It is an affirmative defense to prosecution based on paragraphs b, c, d or f that the property obtained was honestly claimed as restitution or indemnification for harm done in the circumstances or as lawful compensation for property or services.
L.1978, c. 95, s. 2C:20-5, eff. Sept. 1, 1979. Amended by L.1979, c. 178, s. 34, eff. Sept. 1, 1979.
It is arguable that his actions may amount to extortion. If so, then someone in your situation can have an attorney send them a cease/desist letter, threatening to file a criminal complaint unless he goes away. Now normally that is enough to scare almost anyone. An attorney would likely charge a few hundred dollars for such a letter, but it would be an "investment" of sorts - to help make this issue disappear.
Again, most parties would indeed then walk away. Even though this may be a bluff on your part, such a letter is likely to scare him enough.
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