I was terminated on 01/29/2007 and today on 03/24/2007 I got a certified letter from my former employer demanding that I pay $464.00 for a charge on a company credit card that I did not transact. They said if I don't pay it by 04/20/07 they will file legal charges against me. This is in the state of Arizona... Is this legal and what recousre do I have with them to stop harassment, I have already filed a case against them for violating FMLA law.

I suspect that they are none too happy with your filing a case against them. Yes, what they are doing is perfectly legal. It is not considered harassment,. yet.

The first thing you should do is send them a certified letter, return receipt requested. In the letter tell them what you have stated here, if you are 100% sure it is not your transaction. Tell them that you believe they are in error, that you had nothing to do with the transaction. Ask them to please submit proof that it was you that made this charge, and you will be happy to pay if there is no doubt that it is yours, and, that this wasn't indeed a company expense, that was required for you to perform your job properly.
They will not proceed with any legal action if you seem willing to pay and aren't nasty in your response. Wait for the response. If they don't respond and start legal action, you have proof you requested substantiation of the charges and they did not respond. That will go a long way. Do you have access to an attorney? An attorney sending this letter to them would help immensely. It will show them that you are not fooling around, you are taking this seriously, and you have someone who will fight for you. For that amount of money, it seems ridiculous that they would try to come after you. But, not knowing the circumstances surrounding why you were fired and how angry they are at you, it is tough for me to apply reasoning to this.

Another thought that comes to mind is, speaking with someone from the State who office you filed your original complaint with. If they can't help you, they may give you additional guidance and may include this letter you received, in with your complaint/case.

I wouldn't do any thing, let them try to take u to court then do something

With all due respect Emeril, you may be a great chef, but you don't do something after the fact when it comes to the law and our court system. You need to be proactive to get something squared away before it gets to court. If formeremployee neglects to act on this and it does go to court, the court system doesn't take too kindly to people who ignore a problem. He needs to demand proof, to head this off. Who knows what his former employer might cook up between now and then? Unfortunately, there are always unscrupulous people out there that will forge documentation. If they don't get found out, they win. Due diligence is an important process to the law.

I agree with the dog... be proactive and measured in your approach. Definitely advise whomever is handling the FMLA issue that this has come up and you do not believe it was your charge. If you are absolutely confident you never made a personal purchase on the company account, I would certainly respond as well with a letter to that effect requesting substantiation. The burden is on them to prove you used the card inappropriately. Ignoring it may make you appear guilty, as will flying off the handle defensively. Just ask for proof and advise them you have no clue what they are talking about. Cerfied/receipt requested mail is a great idea.