Whether he is telling the truth or not is not something I think anyone on here could make a call on - you have more experience that us of the guy after all.

It could be an honest mistake on his part, and I would expect him to be happy to refund the depost given the circumstance, irrespective of his knowledge of the history (if he didnt he will look to protect his reputation, if he did he will look to avoid the bad publicity involved).

You make no mention if whether you have asked him or not, so I can only assume it hasnt been broadched with him properly.

My advice is to calmly explain that given its history you dont think it prudent to proceed, and request a refund.  If he refuses then again calmly, point out that you believe the details being advertised were a misrepresentation *he must have seen the log book and therefore know the number of owners) and that if he doesnt give you a full refund, you will take it to trading standards.  I would be very surprised if he didnt comply.

After he has done so, contact trading standards anyway - if he is dodgy then they are best placed to minimise the chance of him continuing to exploit others.