Amsterdammer: that is a new revelation to me, well done, thank you, I will present both of these links to them when I go meet them on the 27th.
For those of you saying walk away: even though the keywords are on page and and are easy to rank/keep them there, you still don't mind walking away from 7K CASH?
Actually, I just reread the link and meathead1234's post before replying and had a revelation as well. This is definitely a scam and it is actually explained too.
I have it bookmarked as a method now but wonder how he fixed his social nr.
People are bound to sue him. Your client for starters...
As a working method though, the link combined with meathead1234's post is a working way in my humble opinion. Provided you have the cash to set it up.
But about the revelation and I may be totally stupid here because I have a lot to learn. But since you know what you are doing, here is an idea.
I would go in. Prove this to be a scam with the links. Then pitch the second link with a twist.
Explain that this guy is just robbing them but they are free to spend their money any way they want.
BUT if they DO want to talk about a lifetime contract you can help them but not for that price.
Even if you look at his own Blog they can work out there is no way to do it for free on that price.
Scroll down a bit, it is actually there. Might be page 6 by the time you read this.
Code:
http://www.mastergoogle.com/blog/page/5
Now, you are perfectly willing to keep working for the regular price but you can also accept them for an investor. This will cost 45.000

I mean... You are only one person and there is only so much one person can do in a day... You need hosting, legit backlinks that last in the meathead1234 way.... software written.... All this doesn't come cheap and you were working up to it, but this would set you up for life.
With that money they will give you the opportunity to expand and with that gain more clients, have the money to create your own network, advertise or do whatever. It is a deal that helps both for life.
The way I am thinking is if you have 7K to spend like meathead1234 said is enough to provide the needed results, you still have some money to promote your own shop.

I would thank the client most kindly for his trust in me and actually provide lifetime SEO for free. This guy just paid for your setup for life in business and there is nothing wrong with thanking him.

You can only do this one time of course and if you honestly explain what you are planning they just might do it. They came to you for a lifetime contract right? You are just having an ambitious plan based on it. It is called seeing opportunities. lol
I mean, you are offering them SEO, not the profits from your eventual enterprise. But, since they are giving you the money for a proper setup and you need 40k at least for that. You are making them some sort of business partner, an investor.
And yes, you make 5K profits on them. We are in business remember?

The 5K gives you bargaining space.

Do they really want to deny you profit as fellow business men/women? You need to profit to live right? And nobody is forcing them, they came to you...
Also, it was just a thought. This guy is scamming them and you are not. You are perfectly fine to continue working for them for current rates and they should in no way feel obliged to take the offer. You understand that it is a lot of money but you are a business man. This is a working way if you are legit and this is the only time you will do/need it. After this investment you are set for life so what is 1 site? Can't do it for everyone though for obvious reasons.
And then there is another possibility where they provide you 10 customers. You would provide the SEO for free then too, as long as the 10 ref links last of course. They should realize it actually takes a lot of money to do what you do and you get what you pay for. Nobody can deliver on 7K for life.
/pitch
That was my revelation. I hope you find it useful.

Also, you need to be sure you know what you are doing. For me this wouldn't work but for you it just might. I would get sued. lol
I wouldn't pitch it too hard btw. It is just a thought, a working way that helps both.
I also hope to receive a revelation about the social number soon too. Seems hard though.
Also I don't want to sound like a know it all but for those people that say take the money and run or otherwise scam I always think of why this guy said what he said. He was a criminal right?
http://www.youtube.com/watch?v=zIRwd1S26Ik