There are definitely things you can, and cannot do in this situation.
--Regarding criminal action, it's probably unlikely. Keep in mind that most of the knives dealt with here are under the limit that sets petty crime (i.e. under $400 or $500).
--If you have delivery confirmation and receipts, you can contact the po regarding mail fraud. No reports from anyone that's tried that yet, so no track record.
--You can contact Paypal. Probably the most effective, because their pros take over.
Here on the forums, on the other hand, you have a lot more clout. Post what happened and the name of the offending party. Follow up on advice given. Pm the mods seeking help. At minumum you might get the person banned from doing business here, which is a victory unto itself. In one case, a custom knife maker's conduct was so bad, hhis name is defamed around the internet.
Just fyi, I was also ripped off, although for a fairly low cost knife. Even then, it was incredibly aggravating. For the record, I have continued trading and selling, with perfect results.
For the case mentioned above, see:
http://www.bladeforums.com/forums/showthread.php/824351-Shame-on-you-Jim-Adams. This is the grandaddy of nightmares, and you can see what happened to both parties.
Good luck.