Leedavisone -
Why was he busted? Because the S/N being run through the background check came back as belonging to a stolen gun. Cop gets the particulars as he's headed for the scene of someone trying to sell a stolen gun (which said gun had not necessarily been run through a background check when the gun show seller acquired it). Finds the transaction in progress and, lo and behold, the new buyer is the same guy who first reported it stolen years ago! Yep, that sounds like potential insurance fraud. Now the original owner didn't recognize his own gun, years later, but the cop doesn't know that right off.
Oh, and about that Colt 1911 and the serial number. It isn't hard to fake up a legitimate bill of sale with real serial numbers and a date several years in the past after first looking up the manufacture date (isn't the internet wonderful?) so you can date the bill of sale properly. Age it nicely. Now, file a police report about your "stolen gun" that you hadn't looked at in years ("Honest, officer - it was on the top shelf in the back of that cabinet the last time I got down the molasses to bake some cookies. Guess that was about 2-3 years ago, before my dear old granny died.") Of course you file the report as soon as you notice the theft, but you don't shoot much, and well, who knows how long it's been gone?
Fast forward two weeks. Or months. "Hey, officer! I was trolling this gun related website, thehighroad.org, and saw where some guy just bought a gun that sounded like the one I had stolen. So I compared his serial numbers against my police report, and what do you know? A match! What's that? You'll have an officer in his locale go recover my stolen property and get it back to me? Why, thank you! Thank you very much!"
So, yes, some of us might be a bit paranoid, but there are many scammers out there. Why make it any easier for them?