I have the wallet files backed up and restored but my password isn't working thus I'm unable to send any funds out. The hacker likely didn't move the funds because he already knows he has full control over them and can move them anytime they want.
I'm sorry master-P but that is not how encryption of files work.
This statement is more or less confirmation that you do not intend on repaying any of your victims, at least that is my opinion. From what it appears to me, that you are simply trying to delay having your personal information released, potentially so you can either cover up evidence or you are hoping that those who possess your personal information either loose it or change their mind about releasingit
Yeah something doesn't add up but I don't know well how Armory works so I'll wait for someone to pick this apart. I can't believe a hacker just changed the password (meaning re-encrypted?) and left the funds untouched.
Well here is the thing, when you have an HD wallet (eg an armory or electrum wallet), all you need to access
every single private key contained in the wallet is the seed, and an electrum/armory wallet is really nothing more then an encrypted copy of the seed (along with some additional data, such as labels, ect). Both armory and electrum will only allow you to use a single password to decrypt the wallet, so if you wanted to say sign a transaction from any private key contained in the wallet then you would need to enter the password. The same just so happens to apply to signing a message from an address contained in a wallet. If you look
here then you will see that master-P signed a message from one of the addresses contained in his (supposedly armory) wallet. If you were to assume that the address from that signed message is in the same wallet as his escrow/tipping address wallet then he would have access to every single address contained in his escrow wallet.
Also master-P claimed to have restored his wallet from a backup:
I have the wallet files backed up and restored
When you save a file and encrypt it with a password, then anytime you wish to open/decrypt that file you will need to enter that password. If you were to make a copy of that file, decrypt it then encrypt it with a second/new password, then you will not be able to use your old/first password to decrypt the second file. However in doing this you will not have made any changes to the first file, therefore if you attempt to decrypt the first file with the new password, it will not decrypt and you will still be able to decrypt the first file with the old password. Therefore if someone were to change the password to master-p's wallet file, then any backups would not be affected.
Another hole in his story is that the hacker was having people send btc to addresses that are contained in master-p's escrow wallet......although this would be beyond stupid for a hacker who is trying to steal btc to do, I guess I will give master-p the benefit of the doubt on this one since it cannot technically be disproven.
Lastly, if there is a paper backup of the seed then funds would be able to be moved with no password necessary.
edit: I am fairly certain that there are more holes in your story, however I am feeling lazy right now, and my above argument is strong enough (IMO) to confirm you are lying