To that end, and I'm sorry didn't read all the posts in detail, I would contact the Better Business Bureau in that city - you can use them to pressure the dealer and may intervene as it looks to clearly be fraud/misrepresentation. With what I read in the other posts, I find it really hard to believe that a car expert (usually used car buyers for dealers are), didn't know the history of the car and therefore misrepresented.
Second, on that same note, I would call the Attorneys General Office for that city and file a formal complaint against the dealer. Many of the Lawyers at these offices will assist you as fraud is clearly in their area of responsibility.
It's my understanding the seller is going to give your money back and that is great. It would have been a long road to haul.
1. You could have filed a BBB complaint but they have no enforcement powers whatsoever so the most that would happen is that the business would have an "unresolved" complaint on their BBB record for others to see. It wouldn't have gotten you anything back, aka, waste of time.
2. You could have, still can, referred it to the state' AG office for fraud. First they would have referred you to the BBB. Secondly it is very very difficult, and it has to be proved, not just what they "should have know", to prove outright fraud when a dealer sells a car. Pretty much takes documentation to show the dealer knew of one condition and they sold at another. It then would take the AG's office months to react as usually they have a large case load with a small or even one person handling it. Aka, waste of time.
3. You could have gotten an attorney to file a civil suit against the dealership. No attorney would take this on contingent, so you would have to pay all the expenses and fees up front. If you were willing to do that, and even got a civil judgment against the dealership, good luck in actually getting the money. Once again there is little recourse, other than filing a lien, for enforcement of a civil judgment. O.J. can tell you all about that. Aka, waste of time.
While these avenues could be tools, especially as threats, they usually offer very little if any relief. Bad advertisement usually is very effective. I had a old friend who almost got ripped off the same way by a dealership. He came to me for help and we went over the options. He then went and took out an ad in the local paper outlining what happened. He got a call from the dealership and they wanted to work it out pronto. They got the car back and he got his money back.
The point is when you are buying a used car, do all you homework, see the car in person, drive it and have it independently checked out. I found my Viper through autotrader but drove to see it three times, three hours each way. I checked it over, drove it and had it checked out by a mechanic of my choice. Then I bought it. The law is very murky in determination of a "condition" of a car being sold as used by a dealership. What they consider being in good condition may not be. In most states, a dealership is NOT required to mechanically determine the condition of a used car it is selling. Most dealerships do but even then their determination may be very different than your own. When buying a used car, unless you can prove open, outright fraud, it is "buyer beware". It is up to you to make sure the car is what you need it to be, not what the dealership says it is.
This comes from a long and extensive experience.