After he posts the picture on his website, he tortures and spams the victims with the pictures. So that all their friends and family sees it. He spammed this guys facebook over 6 times.......
If this is true, I'm going to have to go on the offensive, OP.
I'll defend your ability to make a sleezy business by being a passive enabler, but if you're actively peddling your wares at the victims' homes, you remove the hands-off defense card.
At the end of the day you could really turn a profit any way you want. Human trafficking, drug dealing, pornography, killing for hire, and the list of illicit black market business ideas could go on and on. Regardless of moral stance, are these really things you want to be apart of?
I read it somewhere and forgive me for not remembering the source, but a worthy business idea is one that keeps a good thing going or makes an existing service/product better.
I think you should take the little gems of wisdom you can from this experience, and move it to something more productive. If you believe you made a moral mistake, then so be it. Shift fire and recalibrate your moral compass. Then move on to better things.
Start a blog, write a blog post worth talking about. Something to the effect of "How I was a douchebag in the name of traffic, and what I did to change it." Let it be one of those "Who am I?" answers to your life.
But for the love of God man, this mob will eat your soul. Do something, and quickly.
That knock at your door isn't the feds. It's I2E. And you'd best get to answering.