"This phone has been reported lost or stolen".

That specific message means the phone was reported as stolen to the carrier, who blacklisted it. That is a step beyond Activation Lock, and there is no way to bypass it unless you are the true owner of the phone. You can check and see if that is correct here→CTIA Stolen Phone Checker

You will run into Activation Lock which is a theft prevention feature. Without the Apple ID and Password of the original owner, you will never be able to use the device. We can't help and Apple will not. Read this link...

The All Too Common SAD Reality of Buying … - Apple Community

Since you don't know where or when it was stolen, there is nothing you can do to return to rightful owner, but you can recycle it at any Apple Store.