No, No, There's something very wrong here!! Do I understand you correctly,that the chassis number had been ground off ??
Sounds very much much like an insurance fraud job,to me.

I've done lots of 'write offs' in my time and if it's only a 'stolen recovered' it should still have it's original tags on it !! Grinding the I.D numbers off,tells me it's WAAY dodgy!!

Don't touch it with a barge pole !!! It will end up causing you all sorts of greif !!