I had a problem similar to yours, except that I bought an APHA colt from a local man, and was told that his papers would be in within 2 weeks....Never got the papers, xfer, and COULD NOT get his guy to return my calls. So, I knew who the breeder was and went to the stud owner, who put me in touch with the mare owner. Seems that this dude sold me a horse that he HAD NOT FINISHED PAYING FOR!!!
Anyway, the mare owner stated that there was "X" amount of dollars still owed on the colt, and if I wanted to keep him, I would finish paying for him (!?) Bear in mind here that I had already paid $3000 for this little guy to the guy that sold him to me. SO...I go ahead and pay this woman the amount she was seeking, was not much, so I figured, just nip it in the bud and get my papers. (see, SHE still had them, and HE was never going to get them until the colt was paid in full...HE LIED TO ME!) So, I give her the money, and get a receipt and letter from her that states that I will be receiving the registration papers to my boy within 6 weeks. (they still had to be sent off!). Next hing I know there is a Sheriff's officer calling me to "please call him back regarding the colt that I got from "So-N-So"'".
I call him, and he tells me that the dude that I bought him from has reported the colt STOLEN!!!! And that the lady who had come and collected MORE money from me was also stating the animal was not in the right person's posession!!

I produced all of my paperwork and receipts, and still was not able to prove anything other than that I had purchased the colt TWICE! I ended up giving him back to the breeder with a FULL refund, and filing fraud and theft by deception charges on the guy who sold him to me. I also filed civilly against the breeder. Won both cases. And APHA was SUPER interested in what had happened. Sent everything to them, documentation, etc, and as far as I know, their membership has been revoked. (or whatever it is that they do to punish the dishonest breeders)
Just be careful, and watch your hindquarters. I was very sad to see my little guy go back into a terrible situation. He was a good colt who was to make a SUPERB stallion!