Conniving Halligen was sacked by the charity - which had already paid him £300,000 - after bosses began to suspect he was a conman.
But he then had the nerve to threaten to sue for half as much money again, claiming he was still owed it as part of a three-phase contract. A source close to the fund said: "There were a series of letters between our solicitors and his.
"He said he was going to sue us for what he claimed he was still owed and our message was basically, 'See you in court'."
Unknown to the fund, when Dublin-born Halligen started work for it he was ALREADY wanted by America's FBI for a £1.2million fraud in the US.
Halligen - arrested in Britain this week - appeared in court in London yesterday over the US fraud and was remanded in custody. He is expected to be extradited to America later.
Halligen, 48, who also uses the name Richard, was nicked on Tuesday after The Sun traced him to a swish hotel in Oxford.
He and a girlfriend had their bags packed and were preparing to leave behind a £5,000 unpaid bill at the Old Bank Hotel.
Police found a glossy brochure for another lavish hotel - which he was believed to be planning to target as his next bolthole.
Hunstrete House near Bath is set in 71 acres and rooms cost at least £135 a night. A source said: "He might not have been found there for months."
Halligen is chief executive of his own firm Red Defence International - itself a UK arm of his American company Oakley International, through which he staged the alleged US fraud.
The Maddie fund hired him after he was recommended to multi-millionaire Brian Kennedy, who has donated to the search.
deported to US
A source said: "After he was hired, at first everything was good. He set up the FindMadeleine hotline and did a lot of work in phone-tracing data.
"But then he started failing to deliver on things and we realised he may not be all he seemed.
"He claimed he was an ex-secret agent and lived a James Bond lifestyle, saying he was being bugged.
"He accused the McCanns' official spokesman Clarence Mitchell of being an undercover MI6 agent sent to spy on him."
Much of the work Halligen claimed he did was actually done by other private eyes he sub-contracted - who are now owed a fortune in unpaid fees.
The source added: "When we terminated his contract he went mad and said he was going to sue us in court. We told him to take a running jump."
Family spokesman Mr Mitchell said: "We are glad this man was tracked down. It is distressing someone would seek to make money out of Madeleine."