"the owner claims you can log dual given pic/x-c (as a MEII). Any way this could be true?"

That's a stretch. I can see the guy's point based on the verbage of the FAR's. But, I see this as highly, highly, unethical. I'd talk to the "owner" and see how he feels about you contacting the local FSDO to get their opinion. If he hangs up on you, don't feel bad about walking the other way.