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I've been following this a bit for some time, and I'm afraid it doesn't look very much like a misunderstanding.
MLS was an absolute charmer and had many devoted fans, but there were hints of problems even several years ago. It's obvious that he was in some pretty serious business trouble a while back, but what has emerged is pretty shocking even to his detractors.
Last night, someone emailed me a link to a long thread at another forum that was started a year ago - I had no idea!
(I wonder how Paypal missed all those raffle style transaction patterns.)