you do not prosecute. The court system prosecutes. You merely report a crime.
Part of your problem would be jurisdiction. A state must have jurisdiction to be able to prosecute such a crime. It appears that many states have enacted laws that allow them to claim jurisdiction in situations, such as yours, where two states are involved. I read a FAQ concerning Illinois and cyber crime. There answer was if either the perpetrator or victim was a resident of Illinois, Illinois could claim jurisdiction.
Simply contact the DA in your area and ask them if they would take the complaint and if they have the jurisdiction to prosecute. If they state they do not have jurisdiction, contact the DA wherever the perpetrator lives and file a complaint.
Now, if you want to sue "jane" to recoup your money, you will need to sue her in her home state.
as to the PayPal situation; I would suggest paying for an attorney that can research the possibility of their actions leading to your loss since you depended on their assurances of the financial support of the purchaser.

