I heard about someone circumventing disk quota by encoding the data in the file names, having only empty files.
This was a long time ago, maybe as long as twenty years ago. I'd love to find it again, though.
It would be very easy to point out to him the impossibility of his task, but far more interesting to see how long he will struggle with the problem before realizing it for himself.
And, yeah, Mike ought to have paid.