The simple fact of life in this instance is that you are the loser... no bike, no money. I doubt the original owner would stump up any more than a token reward, which he might have offered when reclaiming the bike. He didn't so, tough.
Buyer beware is a well-used term. craigslist is a starting point.
By the way, you did get the badge numbers from the cops, and a copy of your statement?