Legal Question in Criminal Law in Massachusetts

Your options are either to work it out with him, or take your chances if (or, more likely, when) he takes you to court with a civil lawsuit. (He could also try to have criminal charges brought against you, but that seems to be an unlikely option, based on what you've written about how you made an "honest mistake" and thought you had a way to pay him back.) In the latter scenario (i.e., lawsuit), you should expect that he will seek to put a lien on your property,with all that that entails. I don't know the specifics of your situation, but it will be a lot less painful and expensive for everyone if you can find a way to work this out with him without having to go to court. If you're both willing, perhaps it would be productive to have a mediator try to help the two of you resolve this. All of that said, it is only natural that he would seek to get his money back, and I think it is probably in your best interest to try to find a way to get that done. Good luck.

Working this out seems to be your only choice. An application for a criminal complaint would result in charges under the circumstances you described since the money wasgiven for a specific purpose and converted to another use (Fraud & Larceny by conversion). You may claim a Defense of Mistake, but a jury would have to believe that you used the funds for the authorized purpose.

You had a duty to segregate the funds and that you relied on a line of credit is not a saviour. He could file criminal charges against your for larceny, or civil claim or both.