What a mess. IMO opinion, you should just refund the money and call it a day. The snake is put down, everyone lost. Your reputation and a future sale is worth a lot more than this huge mess of a transaction. Things happen, the best thing to do is right the wrong.
In a thread such as this one, the buyer is informing potential buyers of his experience with the seller. You guys turned it into the equivalent of a playground, ganging up on the kid that crapped his pants.
Post your experiences with Matt, dont start flinging poo to be a part of the collective.
Just sayin'.