Hey Will, 250 USD or whatever against the payoff would be sounds like nice odds. Why don't you offer the bet to the group? What is it, 20 to 1 or something? They pay the 250, you give them the winnings if there are any, or a split. Maybe you could sell the whole bet the the lawyer? He gives you a grand or so, you transfer to him the potential receipt of the debt. Entertainment all round!
Another possibility regarding PayPal... Take them to small claims court because they treated you differently and unfairly? I don't think it costs much and it means paperwork for PayPal which they won't like. You've got plenty of evidence. They might just make you an offer. You could also try this with the debit card company. Big financial organisations don't want any hassle in court, it costs them too much in admin and they'll have the report it to the ombudsman or something. 5 grand is an easy write-off for them.
180 days is
BS, ignore it. Fraud doesn't abide by PayPal's T&Cs, a judge won't either. Statutory rights and stuff.
Isn't PayPal based in Luxembourg? Better do it quick before Teresa May negotiates away all your rights, by popular demand...
Seriously, good luck, dude!
BTW, I was caught in a scam. I was buying on behalf on a friend who needed to pay in GBP, so I was happy to be the middle man. The seller was going to be at the UK pinball party, but pulled out, so I sent the cash to him and was then lied to for the next year. Eventually I opened a case with the law and sent details to this guy who was also scammed (URL below). No result yet and was under 200 quid so not the end of the world, but one day, you never know...
http://stevenf.com/2013/08/04/be-wary-of-steven-gauntley/