In general, if you say "he can not do X", you mean that he is not able to do X, and not that he is able to not to X. If you want to convey the idea of being able to not do X, you should say "can refrain from X" or "can stop doing X" or similar wording. Like, "I can not eat chocolate" means that something prevents me from eating chocolate -- perhaps I am allergic, or I am on a diet. If you want to say that you have the willpower to refrain, you might say, "I can refrain from eating chocolate" or "I can stop myself from eating chocolate", etc.
The sentence you quote does not sound like a complete sentence. We often use that phrasing as a subordinate clause. For example, "He can not only frighten them, he can kill them." That is, "not only X, but also Y", where Y is something more extreme than X. (I'm not quite sure what would follow "he can not only kill them", as killing someone would seem to be the limit of what you can do to a person. Well, maybe something like, "He can not only kill them, he can erase all record that they ever lived" or something like that.)