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He is "threatening to sue." He hasn't served you with a lawsuit, has he? I'm guessing that attorney's fees greatly exceed the amount he is seeking from you in restitution for the dues he paid to the fraternity.
Send the matter to your nationals office and the person at your nationals HQ in charge of member services if he follows through on his threats. However, I don't see him getting that far. It seems to me that if he wants his money back or entrance into the fraternity then he is just mad about being dropped. However, it is your right to blackball pledges.
Talk to your chapter adviser and the Greek adviser at your school, in the meantime. Good luck. I don't think this issue will proceed beyond the former pledge making empty threats.
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