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That's terrible, he should sort your friend out, not set the Police on him.
Maybe your friend will take a lesson and think hard about the price of goods and people he deals with in future (but he absolutely did the right thing in trying to reunite the owner and bike).
If this happened to me I would contact the original owner, ask for a written apology (seriously) and the reward for return.
Failing that, I would post his name up here.
don't really like to resurrect old threads but this bike has been bought by a friend of mine. he bought it really cheap (around 200 as per pic) so i told him it was probably stolen and that he should look for a stolen ad on the web - he found it on a site where the owner offered a 100 quid reward. the guy was waiting for him with police officers - my friend was questioned and released. never saw any reward nor the price of his train ticket as the owner said (only after asking) that he only had 5 on him.. he obviously did not do it for the money as the reward was not going to cover his expenses but the whole thing left a bit of a bitter taste in his mouth..