Unfortunately, the investor seems to have little interest in simply moving on. Assuming that the OP is being accurate about his own limited finances, it's fair to say that the investor has no hope of recovering even a fraction of his ~$150k. Accordingly, this is not a rational (if exceedingly hard-nosed) attempt to recover money. Rather, it looks like an emotional, vindictive, and exceedingly ill-advised attempt to destroy another human being, which is pretty much the opposite of moving on.
This would remain true even if the OP had actively defrauded the investor, who'd naturally feel that his attempt to inflict pain was entirely justified. Indeed, in the event of outright fraud, the desire for serious retribution would be normal - even healthy. But the fact remains that, faced with an individual whose only discernible motive is inflicting maximum personal damage, you have precisely zero room to negotiate, unless you considers a discussion about which kneecap to sacrifice a 'negotiation'.
Assuming that the OP acted in good faith (which his own significant financial contributions suggest he did), he still has some leverage in his ability keep what appears to be egregious conduct on the part of the investor confidential. Obviously, a trial would mean full public disclosure of the guy's true nature - something which could have significant impact on his other investments. A good lawyer would recognize this immediately, and use it to maximum effect when responding. More importantly, a good lawyer would be able to make credible threats a way that it consistent with the law, which is something that the OP is almost certainly unable to safely do on his own.
One more thing the OP has in his favor is a clear appreciation that a loss would be personally catastrophic, which makes him far more dangerous in a fight. Indeed, the investor may have overplayed his hand by insisting on his full pound of flesh. With bankruptcy a foregone conclusion, the investor's irrational, go-for-the-jugular approach frees the OP to become VERY aggressive in his own defense. This is something else that a good lawyer will recognize as a valuable piece of leverage, and will use to maximum effect. As a wise fortune cookie once said, "never chase a dog into a dead-end alley".
It's also worth noting that bullies (which is something the investor seems to be in spades) are famously unresponsive to anything but genuine fear and humiliation. It's a big part of what makes them such a scourge, since peaceful people of good will are so naturally reluctant to respond in kind. All the more reason to hire an experienced lawyer, since they're not only capable of making credible and effective threats, but can safely do so within the narrow, and highly technical constraints permitted by law.
If the OP is still interested in being diplomatic, he can honestly say that he and his investor have found themselves at a legal impasse that their contract did not clearly anticipate. For this reason, he's retained a lawyer to advise him on what's likely to be the most mutually beneficial resolution, and will be letting this individual handle the conversation from here.