Good question. I didn't really get a proper answer. The guy I spoke to said it was just a 'proposed' logo which to be honest it sounded like he was blowing smoke, because my client was clearly under the impression that this was a logo they were planning to use and I'd already seen it displayed on his business partner's "Coming soon" website.
Unfortunately I was in a pretty formal meeting with a number of my client's own clients, so it wasn't the time to make a big song-and-dance about it. Anyway to cut a long story short, I think my client is pulling back a bit from his involvement in the project (for a number of reasons, not just the logo) which I think is a wise move, since the business plan had more holes than Swiss cheese.
Edit: I've removed the logo from the first post just to be cautious.