he didn't actually pay Paul, though
Nope --- devious and undisciplined shyster dat he was, he did indeed rob Peter to obtain funds to pay Paul back, but then he used said stolen funds to just engage in more foolish spending (which of course is why he'd had to borrow money from Paul in da first place!). Shame on him.
One should be very wary of loaning money in any case, even if da requester says he needs da cash just to "pay back Paul" (i.e., to settle a debt he presently owes to someone else)... you should first research da requester's past performance in such matters; you will often discover dat some of his past loans were indeed supposedly earmarked for setting his debts with Paul, but he didn't actually pay Paul, though.