Tell them the truth- say he came up with a sob story after you told him about contacting the police, and he has now suddenly recovered and returned the money. They might still want to chat with him and see if he fell ill when selling goods to other people.... Whether they decide to do anything or not is upto them.
Ha ha. One of the other forums I go on for car stuff had an epic story like this one in there. Short of it being: Someone did a runner with some cash for a car dash and some turd looking, rusty sills; a bit of snooping around and they'd found where his parents lived. The guy had gone non responsive and wasn't answering text messages, phone calls, private messages, emails; you name it and he wasn't answering it. So a collection of about 4 forum members went around his parents - which was quite a trek - and explained quite nicely what had happened to his, admittedly, lovely parents. They got on the phone and told him to come around... he refused so they wrote a cheque for the victim. Cheque cleared, all was well. Guy couldn't trade anymore on the forum. Anyway, what is the point of telling you this? It all came out of the woodwork that he was doing this left right and centre - including I believe ripping off some Americans who where finding it difficult to get the money back - and this was part of the catalyst for the effort that got him.
GumTree = ScumTree Listed some old PC's for sale there years ago, made the stupid mistake of listing my mobile number. Got lots of time wasters, people saying they would come and buy and never did. I had one guy turn up, said he'd already paid me by bank transfer before he's got there, and he hadn't and that was never the agreement and that he had a legal right to take goods he's not paid for ! Told him we'd see what the police would say about that and he soon left - will not list anythng on GumTree ever again.