Signing a deal with a gun to one's head isn't generally considered binding.
Although it may not have been a literal gun in this case, having the full weight of the government come down on you if you don't sign is a way for the government to steal a person's money and make a "deal" to keep part of what they stole.
I find it odd that you take the government's side in this. Seizing money from people because they kept the deposits below $10,000 a pop and without any evidence of criminal intent should signal government malfeasance in a conservative mind.
If you are innocent, you can bring an action to get the money back. Unfortunately for this guy, he wasn't innocent.
His better cause of action would be against the bank, if the bank employee was the one who told him to do this. There's a fairly good chance it was the bank that turned him in. ($!0,000 used to be, but no longer is, a magic number.) Penalties are pretty high for banks that don't turn in their customers.
His lawyer gave him pretty good advice to settle, based upon the limited information provided. Settling with your fingers crossed, on the other hand, shows a lack of integrity (again, based upon the limited information here).
I can understand those with libertarian tendencies being against the War On Drugs specifically, and money laundering laws generally, but one violates the laws, just or unjust, at their own risk. I do have little sympathy for those who complain about being held responsible for their voluntary acts.