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I believe he knows now or suspects that Michael is alive. I don't think he did at first when he was accusing Michael of being gay, etc. lol. But that upon his realization that Michael possibly did not meet his untimely end on 6/25, it appears he tried desperately to do some cleaning up and has been doing so ever since.
I think that Klein was greedy and thought he was good to go. He definitely didn't need the money, but notoriety screams at me from him for some reason. Even though his clientele were the cream of the crop, having Michael as his client had to be cause for some gloating. It could be possible that he did some trumped up bragging about Michael to his friends & possibly added some fluff to it to make himself appear more important in Michael's life than he was; like Michael "needed" him. Then when this all hit the, it all came tumbling down and now here he sits accused of something that could've been iflated by his own doing. It will be interesting if he has to surrender his files. I truly want to know what's in them.