I suppose it depends, but I would have avoided the situation
I think this has been said... but I suppose it depends. I think this has been said, but if the service was paid through him, and they were delinquint, I think he was within his rights (although, see below, I would avoid this kind of situation entirely...). If it was not paid through him, he's in the wrong; users of any cloud service really must consider what happens if they lose access to that service (and it sounds like they did consider that at least to some extent since they say they lost no data.) If The gov't (including local gov'ts like this) do have a nasty habit of using criminal charges in cases where anyone else would use a civil suit.
When I was doing contract IT work with a few business partners, we made quite sure that a) Subscription services ("cloud" backup, dynamic dns, e-mail and web hosting) were paid by the client directly to whoever provided the service. We were paid for our services, not to pass some money onto a 3rd party. b) They had copies of all notes we made*; whether they knew how to use it or not, a future IT vendor would find them useful. In other words, we followed the general principal "if the whole IT group got hit by a bus, the customer should not be screwed."
*Notes we gave them included changes we made from stock config on routers, access points, etc.; network maps; device documentation for some devices (for instance one site had a PBX where they had the "end user" manual so it just said to call a PBX vendor for changing half the stuff; we found the real manual with all the info and gave them a copy); administrative credentials (for computers, online services, routers, access points, and whatever else); and miscellaneous notes (for instance, noting one high-end HP network printer they had that dropped off the network several times a week and had to be power cycled, HP never released non-buggy firmware for the darned thing.)