Personally, I would return all equipment COD shipping. If they refuse to pay the COD, inform them you will be charging a storage fee of say, $20 per day. But if you insist on keeping the equipment as a ransom for your paycheck, I would advise the following (I am not a lawyer and not qualified to give legal advice):
Since they turned over the equipment to you voluntarily and you have not resold it, you cannot be charged with theft or fraud. This would be treated as a civil matter not a criminal matter and very doubtful police would get involved if asked.
Offer to sign a simply worded agreement to settle all disputes and return equipment immediately upon geting paid. You all can write it yourselves and sign it; faxing it back and forth.
Innovative Marketing Systems