What about #3)? 3) Your neighbor isn't lying. He really did buy them and put his name on them. Somebody else came by his house, stole them, took them to co-workers house, took his and put the previously ones stolen in their place(i.e. swapped them), and left two neighbors at each other's throats. Wit factor - 10. Why would thief do this? Because after he stole them he noticed they were initialed and didn't want anything coming back on him once he sets his up. So, frame the co-worker/neighbor instead. What doesn't make any sense to me is that the neighbor who originally had them stolen would accuse another neighbor of stealing them just because they were the same and, especially, given that Wal-Mart sells them at a brisk pace I'm sure. The original neighbor just shouldn't be able to accuse another neighbor because his were stolen. In fact, I think the cop is a dumbass for even listening to the neighbor tell him "oh...well...that guy over there has the same ones. please check them for my initials". Is that even legal to have a cop trespass and inspect items without a warrant?
Police overstep their bounds all the time. Unfortunately, they're allowed to get away with it. Too bad the cop took the receipt and boxes too. They probably got thrown away as soon as he got back to the station. Reggietodd's coworker now has no proof to show when he tries to dispute this further.
The neighbor probably saw your friend's snowman go up just after his was stolen. He thought of a way to get his stuff back by writing his initials and calling the cops. Little did he know, that this guy didn't take his stuff, has the box and the receipt, but he's gone this far so he's not changing his story. The cop wasn't too smart to take his stuff given the proof that he purchased it. He couldn't figure out that if a thief steals something, he won't have the box and receipt. But on the other hand, anyone can go put their initials on something public and make a phone call. I like the earlier posters comment - go put your initials on his car.