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Yes. Call the police.
I realize that this may be the last thing you want to do, but the bot***** *****ne is that whomever is trying to extort money from you is committing a very serious crime, and unless you prevent her from succeeding, she will continue to do this to others in the future. Moreover, every time someone gets away with this sort of activity, it operates as an incentive to others. Don't allow her to get away with the crime.
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