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To maintain his rep, 500 is chump change in reality, 1 small job. You start telling other guys about it and it will cost him more even that the lost referrals from you.

500 seems silly of him to throw away a referral source. Before I told everyone, I'd be sure I wasn't getting paid. Sounds like you might, take it and part ways professionally but I sure wouldn't be giving anymore jobs to him.