Find reasons, both technical and financial, to make the most professional recommendation that you can to kill the project. This means just the facts, and no name calling (actual or implied), no editorializing about the lack of quality or organization of the project's goals, parameters, or guidelines or lack thereof--although anything obviously absent should be noted. Take a moral stand, if necessary, about your resolve to not take money under false pretenses, and that continuing the project would be just that. Implying that anyone else taking money for the project, contractor or employee, would be equally doing so falsely, may be either the exact needed thing to do, or the exact most wrong thing to do, depending upon your audience.