Ipod 5 reported as stolen and dont know what to do.

My friend needed an ipod, and she bought it for $120. The seller told her to meet up at a park and she saw it was okay and she had thought it was on factory settings left like new so she bought it and when she got home she saw it had been reported as stolen/lost. It was icloud locked, we could not do anything about it. She tried calling the seller but he wouldn't pick up, She even emailed him but nothing. The owner left a message threatening to call the police so it was pretty much stolen. She called the owner but he/she won't pick up but she lost 120 dollars so what should she do? It is an ipod 5 and it is blue.

I think the $120is gone unless you can get it from the person or the police can get it from the person.
The police should do nothing since you mistakenly purchased stolen merchandise and then turned it in to the police when you found out it was stolen.

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