I think tptacek is correct concerning the legal issues here. In any case, I didn't say the "friend" would prevail in his claim that the OP was an employee of his LLC, nor that he wouldn't suffer unintended consequences as a result of making the claim.
I'm sure that if you refuse to pay when the state government escalates from reminder notice to nastygram to series of phone calls all the way to "takes you to court", and you do something that indicates to a judge that you were overtly trying to shirk paying, then yes, you could go to jail.
The point is that it's not relevant to the situation at hand, because 10 months before that could ever happen, the "employer" is going to get a notice saying they owe some trivial amount of money, and they're simply going to pay it to go away. You would have to be made of stupid to end up in jail over employment taxes.
Note that you're replying both to a lawyer (in dc's case) and to someone who's dealt with this exact situation (in my case); you may want bigger guns here than a pay-per-word Demand Media article.
If you are an employer employing employees, you have to pay your share of Federal and State taxes on their behalf, including FICA and unemployment insurance. Failure to do so will result in penalties that may include jail time. (http://answers.google.com/answers/threadview/id/775884.html). Back to the issue, if the "friend" insists that the op was an employee, he would have been liable for said taxes. Thus he would be incriminating himself. You don't have to be a lawyer to figure that out.
I think tptacek is correct concerning the legal issues here. In any case, I didn't say the "friend" would prevail in his claim that the OP was an employee of his LLC, nor that he wouldn't suffer unintended consequences as a result of making the claim.