Pasodama

~If~ Kevin & Shawn were actual business partners, then Kevin could be held accountable for the actions of his business partner. However, they are not business partners.
~If~ Kevin were a part of the blackmail attempts, business partner or not, he could be held accountable. However, the fact is that it cannot be proven that Kevin is/was a part of the blackmail attempts. In actuality, whether Kevin agreed with it, or not, the only proof, in existence, shows that Kevin is/was against Sean's deplorable actions.
Legally speaking, your business was/is with Kevin and Kevin cannot be held accountable, for his friend's (non-partner's) actions, unless it can be shown that he did not attempt to put a stop to it. BTW If Kevin did attempt to put a stop to it, and was unsuccessful in his attempt, then he would remain in the position where he cannot be held accountable for Sean's actions.
The problem is that you are looking at Kevin & Sean as "one entity" when what you are dealing with, here, is ~two separate~ issues/people. You are also letting your anger, over Sean's actions, cloud good judgment.
Despite Kevin's friend's actions, you are in the absolute wrong by withholding Kevin's money/refund. No matter your suspicions, if you do not have proof that Kevin was/is a part of the blackmail attempts, you would lose in a court case since it can be shown that you, and you alone, are at fault for the snake's demise.
You need to treat Kevin separate from Sean.
As most have been saying, Kevin is due his refund and that is the course you should take.
Then (a separate issue) file charges, against Sean (for blackmail attempts), should you wish to do so.
None so blind as those who cannot see.