[rainfreak]

If you bought in on the Internet then you should report the seller and try to get your money back. Ebay allows for arbitration and PayPal has the ability to help you as well.

That said, the phone is stolen and you know it. Still trying to use it is both immoral and illegal. If you have any question about the immorality of it, think about it this way. If it was your phone that was stolen and someone else bought it, wouldn't you want them to try to get it back to you?

I recommend that you do the right thing. I know it sucks that you may be out the money but the right thing is still to get the phone back to the rightful owner.