Has paypal ever taken a approach like informing the authorties, let
alone close a account?

Just asking, since if he has something at risk, why risk it?

tom @ www.FreeCreditReportAdvice.com

they are kinda fussy since the perp, thats police lingo for thief might
get the money and disappear, people who paid with credit cards and
possibly debit cards could call it fraud and paypal would be out the
money...........