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Marty,
The sending of that e-mail or sms is actually a criminal offence in Aus - demand money with menaces, and it should be reported to the police. The police may not be able to do much if it does comes from an overseas address or phone, but if it is generated in Aus (or the same country in which it is received), then the perpetraters can be prosecuted.
The only real way to stop them is to ensure the correct authorities are informed. No one should be threatened to give money.
Rod
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