Once you restore an iPhone 4s can you use it?

I found an iPhone 4s on the floor.
I swear to everything I believe in I DID NOT STEAL IT!
Its locked.passcode locked.
My friend said he has a friend that can restore it.
That he knows how to do it and it will be as if new.
If I do that will it still be traced?
Can I connect it and use it for myself?
I live in los angeles so what would be the charges if traced and caught?

Why don't be honest and give the phone into police or the reception near to where you found it.