My advice is not to deal with anything like that or any customer promoting, selling or developing anything that is illegal, if I'm even understanding your question correctly here.
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You have no choice but to return the money. Most likely PayPal is in chargeback dispute over that transaction and has to refund stolen CC. Consider yourself lucky that they have not frozen your account balance over this.
Like Corey said, check everything and if in doubt, check it again. Getting money is nice but if the order seems out of place don't hesitate to say no. Remember, paypal only provides you with a few details out of what is truly available so you have to be extra diligent using ips, address lookups and logic to avoid being stuck in a spot where you lose money and have no recourse.