That's a horrifying story MH, I truly sympathise for you and your friend. What you describe sounds exactly like sex by coercion. I don't know what your state's laws are, but I think I must make two points now.
This should definatley be reported to the law enforcement authorities. However you should know that sadly, there is an almost zero chance of this SOB getting convicted. From what you say there was no "physical" coercion taking place and this obviously means that there will be no physical evidence of rape or serious sexual assault. If he chose to deny that he made any such demand, then in a court of law, some smart-arsed lawyer will make hay with it. (Trust me, I have a LOT of experience with these people!)
However you must consider something very important. There is an outside chance that this is not the first time that this piece of filth has perpetrated such an act. There is also a very high chance that it won't be his last. This is why your friend has to report this. I have dealt with several sexual crimes in the past, some of the guys have been innocent, some guilty. All had one thing in common. Their details were kept on our police database and if anything like this so much as showed it's nose, then we knew just where to look.
Perhaps this guttersnipe has a file already, perhaps not.Either way, the law must know about it, even if there is little or no hope of getting him convicted for it. Nothing bad can happen to your lady friend as a result of her contacting the police; even if she does have a record herself. Everybody in the UK and the USA has unalterable rights, and she is no exception. If she is worried about them being skeptical of her story, then take the advice of others on this thread and go to the Rape Crisis Centre first. I don't think it will be very difficult to persuade someone from there to be present when the crime is reported. That will add gravity to the situation for the police because it will make it obvious that her first concern was to find help for herself, not get him in trouble. If some hatchet faced, desk Sergeant who would otherwise be skeptical of her is taking her statement, then it will make it easier for him to believe she is not a troublemaker if a professional from the RCC is there.
I should also add something about the idea of extracting retribution yourself. Does he deserve it? Hell yes! Would it make me feel good it I was the one who gave him a beating? Hell yes again! However, even though this course of action might be morally justified, it could seriously undermine you and her. No matter how much the cretin deserves to have some bones broken, it might easily leave you (or whoever) open to charges against yourself. On top of that, police might be less willing to be helpful if you take the law into your own hands. Unfair as hell I know, but that is the way some officers feel. He might deserve every ounce of pain you want to give him, but that is a VERY dangerous course of action to follow.
Good luck mate. Tell what I've said and try to persuade her to report it. Remind her to go to the RCC first and get as much help there as she can. This HAS to be reported for everyone's sake; hers most of all.