Help needed to recover costs please

Hi,
I ordered some cables to be made by a US manufacturer almost a year ago, cost around $650, paid via paypal (not an AudiogoN transaction, so hope it's ok to post about it?). The supplier originally said they were shipped 3 months later and supplied tracking no, but USPS apparently lost them. The supplier said they were fully insured and they would recover the cost and send me a refund, as I didn't want to wait further for the cables to be made again. After many, many emails from me chasing the supplier, including my agreeing to accept the cables as ordered rather than a refund, I still have no refund or cables.
Can anyone advise me how I can encourage them refund me or send the cables please? PayPal don't want to know as it is outside their 3 month window. I'm prepared to pay a local (US) lawyer to write a letter to them if folk think that would help, though I'm worried the cost of any legal action will soon exceed what I'm trying to recover.
Please help/advise if anyone has similar experieince or ideas.
Dave (from UK)