I've got money on the fact that this dude made up the entire story and still has the frame, and his money back.
I have a little bit of knowledge in this area...
If an item is stolen, and in your possession, you are still in violation of the law. No if's and's or but's. I find it hard to believe that you called, whoever you called, and they came out and ran the vin for you, found out it was stolen, and left with it on their happy little way without doing anything to you. Especially if you had NO paperwork, other than saying, "Oh, I bought it from this dude in Michigan." I've heard that bullshit story countless times.
"These aren't my pants." "This isn't my car." "I didn't know that was in there." "Some guy gave this to me, and said I could have it." (While rolling in a stolen car) "I just bought this from a guy on the other side of town."
Standard response to all of that would be "Ok, if that's true, who did you get it from, and how can we get a hold of said person." If JD hasn't gotten a call from anyone in Law Enforcement, this entire story is completely made up. If the frame was indeed stolen out of Michigan, JD would have had Michigan State Police knocking on his door.
Also, who the hell doesn't pick up their phone, and spend the 4 minutes it takes to call the state police or local sheriff's dept to run a vin for them prior to purchasing something, if there is ANY question? There should ALWAYS be a doubt in your mind if you're buying something without a title, that is supposed to have a title.
You got your money back, and a free frame, congratulations. Buyer's fault 100% on this one. He never should have left with the frame since JD told him up front he had no information on it, and knew nothing about the frames history. He willingly took the chance, and got burned, by his own devices.