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I dont know a single thing about the situation, but often companies pay severance packages when they let someone go, just so that person leaves somewhat happy and not with a bad taste in their mouths. You dont want a guy going around trashing you to your competition and you want to keep a good reputation, because you never know what will become of that person.
From what I can see, your name is getting dragged through the mud, it's probably just easier to pay and move on, because I have a feeling this shit is going to follow you for a while.
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