I know it may sound silly, but i worked for a client that seems not willing to pay me, but is making money with his website...i still have access to the ftp...so, i'm not going to tear down the website if he doesnt pay, but i would at least protect my code that i gave him...so in case i'm sure that he cant resell or use again...
http://www.zend.com/en/products/guard/
If you code for your client in PHP, this will prevent reverse engineering, and you can set the application to expire after a certain amount of time. There are numerous other licensing options available.
I think you have a deeper problem though, you should really talk to your client or get a third-party mediator to resolve this. At the very least, you should receive a deposit. Contracts will also give you some legal leverage, so you should have signed one before you started work.
what form is your code? html? js? java? c#? you can obfuscate js, for java (or .jar file) you can use the strip/pack tools as detailed here.
in general, obfuscation seems to be pretty effective for all of them (even html, if the bulk of it is generated through scripts :p )
Consider the next poor guy that your client recruits to manage that code... And consider the ramifications - because his impression of you will be based on that code!
If your code is written in ASP.NET, you should obfuscate it (Visual Studio comes with the community edition of Obfuscator), but there're probably better obfuscatation tools than that one.
On a side note, I got my code and last payment actually stolen by a client (the binaries not the code itself, but he managed to disassemble the code with help from a developer. Unfortunately it's too easy with .NET). This is one case where I really regret not obfuscating the code.
First, don't do anything that could be taken as a malicious attack against your client. Messing with their FTP after they have ceased communication could land you in hot water. Second, if they haven't yet given you a cent for your work then AFAIK you still own the full rights to that work. (i.e. the copyrights on the code etc. you provided) If they use your code, without a license and without paying then they are committing copyright infringement.
This is all legalese, but I'm not a lawyer. Talk to an attorney before acting on copyright.