He approached me with this issue and upon research I found links from around 50 odd directories to which he never submitted the site to.

All directories were hosted on the same IP address and were heavily interlinked. Plus links from all directories used the same keyword.

I repeatedly contacted these directories to get the listings removed. Finally I got a reply from a person today stating that he is ready to remove the listings but each removal will cost me $25! So the total for removing links for all directories comes to $1250

I told him this is ridiculous but he is not ready to budge. He is not ready to remove the links unless I pay him the said amount.

My question is, how do you deal with such people? Is there anyway to report this? What steps can I possibly take to get the listings removed?

I mean my friend's site got penalized and he is incurring heavy losses because of this every passing day for no fault of his!