This is how I fought my scammer and won:
http://www.net54baseball.com/showthread.php?t=244010
Just to close the loop on this:
I lost my appeal from PayPal, they closed the case and they released the funds to the perpetrator.
I called PayPal back, following the instructions here:
https://www.paypal.com/us/selfhelp/contact/call
I calmly explained that I was extremely upset, and I was contacting government authorities to open a criminal and civil investigation of PayPal and the eBay user. They reversed or cancelled the decision on appeal, and re-opened the case to give me a chance to upload police reports/complaints, etc.
I uploaded the police blotter from my local PD. I then filed a complaint with the USPS and FBI (Internet Crimes Complaint Center), and uploaded a copy of the submitted complaints. If you get in the same mess, you can click either of these links to get you started. It was very straightforward.
https://www.uspsoig.gov/form/file-online-complaint
https://www.ic3.gov/default.aspx
I also sent the complaints directly via email to the perpetrator. And every time something would happen from these government agencies and they would send me an update on my claims, I would forward those to the perpetrator as well. I kept it as professional and non-argumentative as possible. This was my email to the guy:
"I have filed formal complaints with the FBI Internet Crime Division, the USPS Office of Inspector General, and my local police department. Copies of the FBI and USPS claims are attached. I will send you the police department blotter under separate cover. Finally, I will be uploading copies of all of the complaints on PayPal's Dispute Resolution Center landing page, and I will be sharing with your local police department in Folsam, CA."
That was it. No threats. No anger.
Two things happened almost immediately after this:
(1) I got my first ever email from the perpetrator. He wrote, "your a phyco path dude" (his grammar and spelling, not mine) and told me he was told to destroy the card by ebay and would now instead send me the card back, which he miraculously did. I believe he did not follow what ebay (purportedly) instructed him to do because he knew it was the real deal all along!
(2) PayPal refunded my money!
I don't think it is fair for me to have my card and money, too; but I really don't know what to do here, because I cannot fathom sending the card back or giving this guy his money either. The perpetrator has not been in contact with me since his email a couple of weeks ago -- he has asked for neither money nor card (I wonder if PayPal let him keep the money, and PayPal paid me out of an insurance policy or something).
Moreover, the card may actually be part of a crime, so I do think I need to hold on to it now for some period of time in case the FBI, police, or USPS OIG come looking for it. After all, I have not, and do not plan to, withdraw any of my complaints.
So, for now, I hold on to both, and await further instructions. But, I hope this post will help others handle these matters if it happens to you.