I'm not going to write a lot here.

Everyone here has basically said same thing I would have, Scorpio.

It really sucks that this client did this, but you're better served to just refund him and move on. Chalk this one up to experience.

If you hadn't agreed to the refund, then I would be taking a different tone. Just be sure he doesn't have any psd files. If he does, then before you send a refund get a signed statement that he will not use any aspects of the design you submitted.

Gary-Alan