The torture victim was identified by Nabulsi as an Afghan grain dealer, Mohammed Shah Poor, who the Sheikh accused of short changing on a grain delivery to his royal ranch on the outskirts of Abu Dhabi.
The UAE government, in its statement, says the matter was settled privately between the Sheikh and the grain dealer, "by agreeing not to bring formal charges against each other, i.e., theft on the one hand and assault on the other hand."
Nabulsi says Sheikh Issa became increasing violent and sadistic following the 2004 death of his father, the UAE's first and only president until that time, Sheikh Zayed bin Sultan Al Nahyan.
"It's like you flipped a switch and the man took a wrong turn in his life and started getting violent," said Nabulsi.
Sheikh Issa is one of the country's 22 royal sheikhs but does not hold an official position in the UAE government.
Nabulsi first met Sheikh Issa when he traveled to Houston for medical reasons. Nabulsi provided hotel and limousine services and their relationship grew into a business partnership, he says.
Nabulsi, in his lawsuit, says he was falsely arrested on narcotics trafficking charges by Abu Dhabi police when he refused to turn over the tapes and mistreated in prison, where he was held for three months.
"They would stick a finger up his anus and say, 'this is from Sheik Issa, are you going to give us the tapes,'" said Nabulsi's Houston lawyer, Tony Buzbee.
"They would keep him from sleeping, deny him his medications, tell him they were going to rape his wife, kill his child. They made him pose naked while they took pictures," the lawyer alleges.
The UAE government said its review "also confirmed that Mr. Nabulsi was in no way mistreated during his incarceration for drug possession."
After a short trial, Nabulsi was convicted of having prescription medicine without a prescription from a local doctor. Evidence at the trail showed his doctor in Houston had prescribed the medicine.
Nabulsi was expelled from the country and his passport is stamped with the notation "Not Allowed to Return to the UAE."
Nabulsi says officials at the U.S. Embassy in Abu Dhabi were aware of the torture tapes but took no action to protest the Sheikh's action.
The UAE is considered a stalwart U.S. ally in the region, with close cooperation in working against al Qaeda. The U.S. Navy has an important base outside Dubai.
Nabulsi says he even showed portions of the tape to a Department of Homeland Security official stationed in Abu Dhabi to train UAE police, Bill Wallrap.
Nabulsi says after the U.S. official watched the tapes, he advised Nabulsi to "gather your family and get out of the country as soon as possible for your own safety."
A spokesman for DHS said neither Wallrap nor the DHS would have any comment on the torture tapes.
In its 2008 Human Rights report, the U.S. State Department referred to "reports that a royal family member tortured a foreign national who had allegedly overcharged him in a grain deal." The State Department made no reference to the video tapes played for the U.S. official.
Other U.S. embassy employees did help, says Nabulsi, who credits them with keeping him alive by their visits to the prison.