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With the type of people you described it probably wouldn't have made a difference, but telling them "that it would not be smart to threaten me and you don't know who you're talking to" sounds like a threat and could serve to escalate the situation.

At the point at which verbal threats are being made getting out of there if possible would be my preference, maybe with a "I don't want any trouble" or something to that effect (and then calling the police once away.) I certainly agree with the others that five feet is way too close for comfort.

Glad it turned out ok.