Wow. Although I've never dealt with you, I get the feeling that you are the victim here.

However I can understand where this Virgil Barnett is coming from. He must think that you are the scammer and he has you scared sh!tless, that's why you returned the money. It sucks that this has happened, but I hope that paypal will be able to clear it up for you, perhaps by showing that there is no link between you and the real scammer. Maybe you can register on those knives sites and try to explain what is going on.

Best of luck bro.