It looks like I'll finally have it all sorted out soon.
Actually, PayPal and my bank were both VERY helpful. Both parties have an active anti-fraud forces, and they both jumped on it in my behalf. I've since gotten all the transactions reversed, and I'm essentially back to where I started, money-wise.
BUT - and here's the head-banging, frustrating, sleep-losing half of the equation: I had to close several bank accounts, get new ones, pay for all new computer-fed checks, change (and endlessly explain WHY) all my merchant accounts (credit card acceptance, bill paying, online sales, etc and endless etc). It's taken DAYS of doing little BUT this crap. In the meantime, I had bills come due - and no way to pay them either online or with still-to-arrive checks. Try explaining that to creditors over and over again!
It's a goldurn nightmare.
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