Did they ever give this guy a backstory on why he's in Solsteim Strong handing people?
I've read a lot of notes in people's houses in Raven Rock (I get curious...) and from what I can tell, Raven Rock is still in a very bad way. Supplies are hard to gather, food is still scarce, water isn't the cleanest, protection and guards are wearing thin and wearing down.
If I had to guess, I'd say he actually plays a somewhat unwanted but necessary role in the town's economy. He seems fairly well off, or rich if you prefer the term. SO my guess is, he loans people money that he knows they can't pay off, they spend it, helping the economy, and then he strong hands them as you said to get them to work harder to pay back debts, increasing productivity.
Not the most morally bright situation, but sometimes you don't always get to take the high road.
Personally though, I still killed the bastard. My coin more than takes the place of his, I bring in tons of profits, and I got the mines running again, as well as the guards back in order, and the bar running better.