I can't imagine writing this off. He's been seriously wronged, to the tune of quite a lot of money. The raise alone (promised in writing, never delivered) is probably substantial, considering it's been about a year since it should have happened. The tax issue seems less clear, but I have a hard time imagining you wouldn't be liable if you hid important investment details from a shareholder and therefore caused him a huge tax liability.
In any case, it certainly seems worth talking to a lawyer to see if there's a case, and if there is a case it's absolutely worth pursuing. If you let people get away with this behavior, you just encourage more of it.
The impression I'm getting is that he's going to have to pay taxes on the difference between the strike price of $0.0001/share and the investment price that's now established, to the tune of paying $10,000s of dollars for what are likely worthless shares if/when he stops working for them.
If that is correct, at this point nobody wins. At best from his viewpoint, the company covers his tax bill (or I suppose establishes a new investment price a lot lower through bankruptcy or whatever). Much more likely is that he's going to have to weigh whether suing them and the likely payoff of that will be higher than the tax bill; hmmm, he'd better get a reading on whether he can pierce the corporate veil and go after them directly. Heck, he also needs to see if he can arrange a payment plan with the tax authorities, as others have mentioned; that bill will be due very soon, whatever the final outcome of a lawsuit is.
They're indeed snakes, the shares are indeed almost certainly worthless, but not for the purposes of his 2014 personal tax year :(. ADDED: unless, as others have pointed out, the investment was structured as debt instead of equity.
Yet another example why non-founder options/stock is frequently a negative.
You may be right, but he may also have an easy case. The point is, talk to a lawyer before deciding what to do. It could be that there is no case and pursuing this would be completely pointless. It could be that this is a complete slam-dunk for both damages and legal fees and it's completely worth doing. Or it could be somewhere in between, but he needs to know where he stands before deciding.
All important points. If he is financially strapped by a five-figure tax liability (presumably that's the income he'd be taxed on, meaning the actual bill is less than half, possibly quite a bit less), there is no way he can afford to take these two folks to court. Even if it's a large tax bill ($10-20-30k+) it's doubtful he can afford a lawsuit on top of that. If the Canadian revenue system is anything like the US's IRS, I sincerely doubt they're going to let him wait to pay that for the year or two (or more) it would take for this to resolve itself in the judicial system.
Even if he can afford everything, it still may not be worth it, even if his goal is just to prove a point/stick it to the dishonest cofounders.
In any case, it certainly seems worth talking to a lawyer to see if there's a case, and if there is a case it's absolutely worth pursuing. If you let people get away with this behavior, you just encourage more of it.