I am amazed that the dealer would go through so much trouble over what is likely no more than a $5000 loss on the sale (difference between the final auction price and the invoice price).
At this point, the OP could type retractions until his fingers go numb. The initial actions and this most recent letter do nothing more than confirm that this is a "dirty" dealership.
2008 BMW 535i Space Gray, Black Leather, Dark Bamboo Trim| Sport Automatic with Paddles | Sport Package
2008 BMW M5 (gone, but not forgotten) Space Gray, Silverstone Merino Leather, Madeira Walnut Wood Trim | 7speed SMG | All options
Mods: Corsa Exhaust | RPI Ram Air Intake | H&R Sport Springs | Rogue Engineering 12mm spacers