Tom Williams,
You better come up with %100 of everyone's bitcoins ASAP even if you need to buy them with your own money from one of the exchanges.
Those bitcoins are YOUR responsibility.
I can think of times in my life where I made mistakes, and paid tens of thousands of dollars out of my own pocket to make things right.
Now it is your turn.
Do the right thing.
This x 1000.
If he's not incorporated, he can be sued for his personal assets and cash by anyone and everyone who lost bitcoins from this. I encourage people to take this route once more of his information is revealed, and if he does not fully reimburse every single person who used the service.