If you paid through Paypal you have a right to have your money refunded.
You should contact the financial Ombudsman : http://www.financial-ombudsman.org.uk/
I did exactly that, and while they are not the speediest bunch - it took 13 months for the department that deals with Paypal to resolve my claim, which gives some indication of Paypal's service standards - they are thorough and they are fair.
Incidentally I reported the 'crime' to the police, who did the square root of f-all because the guy didn't live at the address he registered with, and they couldn't be arsed to look for him. The crime reference number went a long way with the ombudsman though