Would we be on the hook for 1) fraudulent conveyance or 2) what if seller files for bankruptcy within 2 years of this transaction.

I understand that fraudulant sinkhole claims ran rampant during short sales in the past.

Assuming you are correct and he fraudulently entered into this contract with you.

They simply regulating the amount of permits, increased fees and adding enforcement to combat the major issues. 

All they need to do is go to their bank and explain that someone fraudulently took their money.

Was that loan sought under fraudulent terms?

The blade is simply a metaphor, not necessarily to be taken as a combative blade.My point on persuasion is that a person's ability to persuade lies more in their ability to empathize rather than convince.

If this is the case you make and it is untrue it is arguably fraudulent.

An even greater effort to combat the miscommunication that already is shaping public opinion.

This is the best exit strategy and you don't have to worry about doing something fraudulent.