I was contacted by the Gemological institute of america (GIA) back in May of this year that someone had turned in a diamond which had been stolen from our house during a break in (There was a unique serial number engraved on the gem) 4 years ago. The individual who turned it in to be appraised likely purchased it from someone and likely (?) did not have knowledge that it was stolen property. Yesterday I was informed that even though that gem is the one that was stolen from my house, the person who turned it in has the legal right to the property because he purchased it in good faith from someone (Not sure where he got it from as of yet). I was under the impression that a "Thief cannot transfer good title", is it true that this individual has a legal right to the stone and I do not?
Additional info: GIA is in NY, and the stone was part of a ring so our insurance only partially covered the value of the gem in the ring.