1. Do not take legal advice from the internet. If you are concerned about legal trouble and can afford to do so, find an attorney in your area that you can consult with for an hour on this. (They might appreciate the laugh.) Even if you can't afford to do so, make a few calls. You might get lucky and find someone willing to do a brief consult for a little less. Also, attorneys happen to specialize in writing scary sounding letters that have the unique ability to make nuisances go away.

2. Give oDesk some more time. It may take them a day or two to retrieve their head from their ass.

3. Set up a filter to route this fool's messages to your junk folder where it belongs.

4. Consider this an education in the quality of customers that oDesk cultivates, and think hard about whether or not you could make more money for less trouble elsewhere.

5. I'm unfamiliar with Indian law (again, you should be talking to an attorney, not HN), but there may be some state agency you can contact regarding this guy. I once made a nuisance write an apologetic letter and then go away forever by contacting my state's attorney general's office and filing a complaint. It took all of less than two hours of my time and no money for the nuisance to receive a scary-sounding warning from the state.

In my totally-not-a-lawyer opinion this guy is a scammer and I'd simply ignore him and not lose any sleep over it until and unless he started demanding my attention elsewhere, in which case he would get my full and undivided attention for as long as it took to make him run away.