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What do I do?
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This is a really tricky situation. I know a guy who runs a stand at exhibitions as an extension to his normal store. His approach is to be very watchful of certain potential customers - for example, at the last show there were a couple of kids wandering around handling everything, they got the full "watched like a hawk" treatment as you might expect. <br /> <br />I'd go with previous suggestions and try to negotiate this one. You technically hold all the cards - this guy has falsely accused you of theft, and also stands to lose a lot of customers when you tell your friends about this incident. Remember only to threaten legal action for defamation as a last resort, and then only if you can back it up. However, I can't believe that he's unwilling to even discuss the matter, so give it a try. <br />
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