Thanks for the advice. I might go with this one after holiday ends. The only problem I see here is that he has more rapport with them (since I'm more product oriented and he's money oriented).
It's going to get real messy, especially since he holds all money, bank, passwords info (now I understand why he wanted to take control of those stuff in the beginning). Firing him will be so messy, and the 3 employees we have today respect him a lot especially since he's an expert following those rules in the article I stated in the original post (he's even deceived me lot's of times!)
shit.. Sometimes I think I need a new startup problem to solve to leave the company because this is not letting me sleep at night (and it's no longer the first thought when waking up in the morning).