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also, the police should do something as it is classed as fraud this..
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Definately get on to the police, take all the information you have.
Quite shocking how police can't do anything over Bank Transfer ...
Its not shocking. When you think about it, there are many scams/deals/disagreements occurring, involving money, on a daily basis. You cannot expect the Police to get involved and adjudicate financial disagreements. For this, the small claims court (or for larger amounts, the higher courts) is/are provided.
People seem to have a blinkered view that the Police will get involved a case involving such a small sum because it is fraud. First off, it is not fraud, until it is proven to be fraud and even then, the amount involved would have to be significant. The fraud being committed would have to be widespread, almost compelling the Police to hand this case over to their fraud department. Also, we have not heard the other person's side of the story. What could swing this and make the Police take an interest is if you push the "drug dealer" angle. This "might" prompt the Police into action. If you had strong (hard) evidence to suggest that he was a drug dealer, your information should be passed onto the drugs department, but this probably wont help you in your financial disagreement.
The OP has email evidence of the threat involving the comment about "bones". The OP might have a case to goto court over this threatening behaviour, however, I'm sure most solicitors would advise against going to court over this as there was only 1 threat made in writing. The other threats were made over the phone, for which there is no evidence. Also, the defendent could argue that the plaintiff threatened him first.
Its all about proof, severity of the crime (if any) and regularity of it. If you dont have any proof, the crime isnt severe (as in this case) and its only happened a few times (as in this case), it is very unlikely that the Police will want to be involved in this at any level, unless of course you goto a Police station in a very sleepy town where nothing ever happens; then, you might get some upstart who wants to do something about this. Maybe. If he/she feels like it.
Anyway, I hope you get it sorted but dont expect the Police to get involved in an official capacity.