I am a noob sailor here, but I would like to share one lesson that I have learned over my 61 years of life.
First: Why did you buy the boat in the first place? Was it a hobby that you wanted to pursue of fixing up old sailboats that were in bad shape? (there are people that do that)
Or, did you buy the boat to learn to sail and enjoy time on the water? I am guessing that this is most likely the case. If so, pursue the PO through the legal system if that makes you feel better. Personally, I would let it go and move on with my life. This guy has already taken you on the boat purchase, but now he has really gotten to you because you are giving him a good portion of your time and mental anguish to him by allowing this bad purchase to become your obsession for justice.
Anyway, what I am trying to say is that every hour you pursue him, and every hour you spend on trying to repair a boat that is not worth the cost of repairs is an hour that you are not on the water with your kids and wife enjoying what sailing has to offer you.
I am certainly not trying to tell you what to do, I am just explaining from the perspective of someone who knows how short this life is, and refuses to let someone else try and sidetrack me into pursuits that don't return any happiness to me.
Look at this way, what would you rather have scripted in to your headstone?
He was a great dad, husband and a heck of a sailor or " He was great at chasing down deadbeats and getting justice"?
Just my .02, I know it's not worth much.
Enjoy your life my friend. I will be out on the water.