If someone brags to you about stealing $500 and you have the chance to take the stolen money, is it morally acceptable? There is no option to go to the police because you can't prove they stole it, you also don't know who they stole it from. But you can get away with stealing it from the thief without them knowing, do you do it?
Are you sure you know the money was stolen from an innocent person? Find out what you can, before proceeding / intervening.
Even if you could, never go the police. They are paid with money which is forcibly taken from others. (that's theft) To involve them would be ironic on many levels.
You could do nothing and simply disassociate from the thief. Unless you like thieves. Don't be surprised if they steal from you if you continue to associate.
You could ask the thief to return the money. Tell them it's the right thing to do and they will be a better person for it. If they won't, walk away or MAKE them return it. Before you walk away, cry a little and tell them it makes you feel sad, they are on the wrong path. Maybe toss in a few "god is watching you" lines.
If you walk away, and you are positive there's a theft, let others know the person is a thief, you could even tell the thief he will suffer the consequences of being a known thief.
If want to MAKE the thief return the money, you have to go all the way. Use a blow torch, they will talk. Probably won't take more than a minute. Never fails.
If you take the money for yourself, "god is watching you".
