I bought it off craigslist he told me it was set as a new ipad he turned it on and showed me set up as new till i went set up thats when showed it was stolen
You've just bought yourself the most expensive paperweight you'll ever own. There is nothing you can do. Next time, I'd recommend buying from a more legitimate source. Either that or make sure you can set it up before you give them their money! Meet somewhere like McDonald's or other places for free WiFi to test your products and check serial numbers.
Just an add, in the interest of being a Good Samaritan and doing what's right, you should bring the phone into an Apple Store so that they can get it back to the rightful owner. It might also be a good idea to file a police report.