I am about to take on a client who is a mutual friend of someone I know. He has a legit business, but one of his competitors somehow complained to google and got his whole site blocked.
He's starting a different venture now, but I worry - what if this happened to another site I am hosting on a vps for example. Would the fact that I have a blocked site on my server affect my other clients? Could their sites be blocked too for using the same IP address? What are the risks involved?
The first thing I would say is that Google don't block sites because someone complains to them, there tends to be a pretty good reason.
Regardless of why the site was "blocked" - hacked or penalised for underhand SEO tactics, I would expect it to be at domain level only. I wouldn't expect an entire server to be penalised.
As MrG says, Google don't block sites unless there's a good reason - so it's important to understand the business of the client. If he is using nefarious tactics, that might have included unsolicited mail (spam). Spam servers are blacklisted by IP, so any future abuse could cause legitimate mail from your other customers to be blocked.
With shared hosting many sites will share the same IP address, so it wouldn't make sense for Google to block by IP.
