Do I have a case atall?

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KitKat5

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I recently worked for an employer who is know to be a little mentally unstable and verbally abusive to employees. Due to that fact, I was in the midst of looking for another job. Somehow she got wind of that, and the next day she is accusing me of stealing money from her! I never stole a thing from this women. Needless to say I am no longer employed there. Now all of the sudden I am hearing from random people in the community, even people who could possibly be job opportunities, that she is telling people that I stole from her and I am a theif and not to hire me for anything. Also telling people if I pay her back the money then she will not press charges, if I dont pay then she will. She never even spoke to me about paying her back-even though I wouldnt and would fight it.

I just want to know if an employer can do this? I also live in MA. When I was employed there, she brought her husband to the office, and made sure my cowrkers were there and accused me of stealing, didnt even ask me. Then told everyone there I had a drug problem and needed the money. Now mind you for the job I was in the process of getting, which she may have ruined, required a drug test which I took and was of course negative.

I just want an end to this, she is insane!
Please help me, I dont know where to go from here. Thanks so much!
 
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