What would you do?

You need to ask the PO directly.
Handling stolen goods is a crime.

If it's stolen, there are a variety of ways forward that means the thief will lose out and maybe even get busted.
 
Somebody should tell "stash converters".

Their checks seem to be ....

Shop...."is it stolen"
Seller...."yes, i mean no...no deffo not stolen..look I've even filed the postcode off".
Cash converters asks for ID, so if the seller doesn't care...

Vendor shows passport.
Under occupation:
"Thief"
 
Picked up the bike this morning, have been unable to contact the original buyer but the shop seemed like a professional outfit in a major shopping centre and when I explained the history to them and my concerns about the bike being stolen the response was that they knew the person who sold it to them and they were quite sure he was legitimate. (They would say that I guess) They also said they did checks on all bikes to see if they had been reported stolen. I guess I have done what I can now.

The bike is pretty much as I sold it with no damage apparent, the decent metal flat pedals have been change to orange resin flats and that's it. It has some dust and dirt on it that shows it was used for a while and the tyres show some signs of extra wear from over enthusiastic rear braking!

So I now have decisons to make on reselling it, I think the Deore LX/XT groupset was over the top for the bike, so I may swap that out along with the LX/Mavic 517 wheels then sell it for a more affordable price.
 
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