I imagine that if you completed all the skills required as a NAUI OW diver there is no harm done. But if you did not complete the NAUI OW written exam, someone is breaking the rules to make your life easier.
Hold on a second... The PADI instructor lost his teaching lisence because of his paperwork.
Now the shop owner is offering to FIX the problem... With more bad paperwork?
The easiest thing to do might be to find another shop that does PADI.
Tell them whats going on and have them talk to PADI for you.
You can probably pay a small fee and just demo your skills to another PADI shop and see if they can get PADI to certify you anyhow.
If you go NAUI you probably will have to address the Rescue diving, Snorkling, Compass navigation... And a whole new set of manual dive Tables... No PADI dive calculator. I'd like to see another NAUI diver added, and you can only benifit from the added skills...
But PADI should be the one to help you if you already paid for PADI.
Worst case...
Tell that shop owner you want a refund (not shop credit) for the class and checkout dives (You were not given the services you paid for and they gave you an illegal instructor) then go take a differnt class at another shop or something.
You probably have a pretty good case to sue that shop if they give you a hard time... Talk to an Lawyer.
I'd certaily report them to the Better Buisness people so others do get shafted from that shop.
If the owner wants to just give you a NAUI card straight across... You might need to let NAUI know. They probably won't be too thrilled about it.
Safer Diving through education...