Legal Question in Criminal Law in Oregon

Re: Is an unpaid loan punishable by jail time?

Your ex can take you to small claims court for the balance you still owe her, plus interest and court costs. But you may have a more serious problem on your hands.

You say your ex "gave" you the $3000 " to invest in the stock market". If she really "gave" it to you as a gift then she has no right to demand it back. My sense is that this isn't what happened, and that instead you agreed to invest the money on her behalf.

Failing to repay a loan is not a crime, but appropriating for yourself money that was entrusted to you to invest on behalf of another is. The amount of your loan was only $500. The additional $3000 was not a loan, and so what you did was quite different from failing to repay borrowed funds.

When you cashed out the investments you had made for your ex, you stole their value (which may have been much more than $3000 by then) from her. This probably amounted to embezzlement, though I would need more facts before I could be sure which crime you committed. But if you took you ex's assets for your own use you almost certainly committed a crime. If she is serious about trying to get you prosecuted you should get serious about finding a criminal defense lawyer.