If yes, go by the contract is your best bet. If the contract does not provide for these situations or if you don't have a contract, you will have to obtain proof that everything was okay at the time of their stay if Paypal demands you to produce such. Of course, if you don't get favorable result from Paypal, you can always sue them in FL state court for breach of contract to get your money back.
Last but not the least, never ever deal with Indians again. They are notoriously known for being able to pull this type of gimmicks. Maybe it is prototyping, or even prejudice, but I believe it is for your benefit.
