Tammy,  I am not sure that you can really DO anything.  I don't  know what information anyone can get through the State, that is not already public information.  I also don't know what lengths they are going to harass you.  I have no idea what this person's motives are, or what they are trying to accomplish.  Unless it is to upset you. 

I am not trying to trivialize this matter at all.  It is an awful feeling when something like this happens.  No matter how long you are in this or any other business, some of us can never become hard enough or cynical enough where things like this don't bother us.
I myself have run the gambit of emotions when something similar has happened to me.  My best advise would be to try to ignore it as much as you can.  They are the ones with the problem, and if you try to go about your business as if they don't exist in you life, as difficult as that may be, you will be better for it.  Your clients will respect you, your employees will respect you, & the other person will be the one with egg on their face.

I wish you luck with this problem and I wish you luck with your business.

Wanda Steudel
AccuSearch Co.