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To be accused of criminal fraud you would have had to actually defraud someone. Doing business in the name of a corporation while not being incorporate can only be counted as a fraud if you caused someone damage. So for example, if you entered into a transaction where their reliance on you as a company played an integral role to the transaction, and the transaction when awry, then you would potentially have a fraud issue.
Nevertheless, fraud, in terms of the criminal law, is reserved for circumstances where a person with intent, deceives another and deprives that person of property or money.
Paypal is taking the action of closing your accounts because they believe that it is misrepresentative for your customers to have believed that they were dealing with a corporation. However, this does not rise to the level of criminal activity. Further, unless some damage was done to one of your customers because of the accidental misrepresentation, there is likely no civil liability
In short, it is my opinion that you are in the clear and can rest at ease.
If there is any further issue regarding this matter you would like me to address, please feel free to reply back and let me know.
Best of luck,
Zachary D. Norris