What should i do with my iphone

Alright so i bought a used iphone 5 yesterday that has ios 7 on it.
So after i checked it and paid the guy he earased all his data by going to an app called "Where's my iphone" and making seem like the phone was stolen so that everything was earased.
After the phone opened it was like i bought it from apple itself, like i'm choosing the laungde and country and stuff like that. But then the phone said "This iphone was stolen and was earses, you must log on with the apple id which was used to delete it"
When i told the guy (i sent like 5 messages until he finally replied) he said just hold the off and home botton for 10 seconds then hold the home botton and connect to itunes and do an Iphone software update and it will go right back to usal. I did that but nothing worked its still was the guys Apple ID which he won't give me or come to my house and log on then leave.
What should i do?
Please Help.
Thanks for reading this <3

Added (1). Sdins: that what i told the guy but he replied saying that he called apple and thats what i should do.

If its iOS 7 then nothing you can do. It has theft prevention on it, so a stolen iphone needs the password. You also can't turn off find my iphone or turn wipe without a password too, unless he did that before installing iOS 7.

Using the iCloud app will not let you get on. He should have used the erase everything option that is on the phone instead of using the app if your phone is lost/stolen

Save any documentation of communication you may have (texts, call logs, voicemails, etc.). Save the initial listing if you found it online.

Send him a firm but polite message saying that the phone is indicating it is stolen property and that you are sure it is a misunderstanding but his unwillingness to cooperate is starting to make you wonder and if he can't help you resolve the issue you will be filing a report.