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Unless you're lucky enough to have a lawyer member come by this thread, I also recommend at least paying a lawyer the $50 or whatever he wants for his advice with the situation. That doesn't necessarily mean pursuing a civil court case, but get legal advice from a professional, and find out exactly what all of your options are before you make your decision of action.
What the previous employer is doing to you is serious, and warrants advice from a legal professional, in my opinion. Telling lies to people that call for a reference would be bad enough, but the fact that he is intiating the contact with potential future employers and even personal friends/acquaintances is sick. Don't let this slide! If you wait too long, he'll have contacted enough people that your chances of getting a new job within reasonable commuting distance in the foreseeable future will have dwindled terribly. The longer you wait, the worse this will get, I fear.
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