OMG that is really messed up Animal!
Dang, now I know why you are so angry and want to beat the crap outta the guy. He did get caught though right? And will be punished by the law in some way?
I'm sorry to hear you lost 2 clients, and hope it will stop at the 2. Your reputation has been damaged a bit, yes, but I think reputations can be gained back. What you should probably do is make sure that you have contacted all your other clients, and do a good job of assuring them that you have taken precautions to make sure that sort of thing never happens again. If you don't feel you are good at that sort of thing, let one of your employees do it, someone who is a people person and good with... convincing (for lack of a better word). You CAN bounce back. *HUGS*
Again that just sucks, if that guy was in my neighborhood, I'd be tempted to hit him in the knees with a baseball bat myself.