I think I’d walk away and let him do whatever he wants with the money. You’ve told him you are disappointed in how he is treating your daughter and your mother’s wished, but that’s all you can do. All you can do is say, “Look, Dad, you know what the money was intended for but you do what you want to do.”
Unfortunately, I had a father like this too. I learned a long time ago to stay out of business deals with him. Learned the hard way.