Except, as it was organized, it wasn't his to close.
If he did the right thing he would have gone to jail and took responsibility for his actions that he alone was responsible for and whould have gotten his legal advance on his own dime before taking anyone's money.
As it was organized, it was an illegal securities trading market. Generally, the government isn't going to care about the company rules involved when they are deciding who will go to jail. That's one of the drawbacks with illegal business, hard to get the government to enforce your contracts.
Have an illegal drug business? I don't recommend thinking the cops are going to help you get your drugs back if another dealer rips you off even though he agreed not to.