The only way I can think of to correct this is to restore the ipad back to factory settings.
Go to settings/general/reset/erase all content and settings/'set up as new'
How to back up and restore (iCloud and iTunes)
do you have a computer?
Update itunes on computer and then connect ipad, open ipad in itunes and restore
if that does not work, then you can put it into recovery mode
Unable to update or restore
Thank you for your reply.
I have tried both of your suggestions.
Sorry but neither of the two suggestions work.
For your knowledge and everyone else's:
First suggestion of restoring through iTunes didn't work at all, as soon as I clicked on the restore button in iTunes, it again asked for the Apple ID of the ghostly person who doesn't exist. (the same person whose phone number is suggested to call but when called, that person denies reporting any iPad stolen.)
Second suggestion of recovery mode, did give some hopes, but we ended up just updating to iOS 7.0.4 and then when the update was completed and iPad restored, it went back into the same loop of asking for the Apple ID of a person who doesn't exist!
Please help! Thank you.
The iStudio employees in Thailand are extremely rude and unhelpful, approaching them yields nothing.
All they're interested in is selling new products but no support whatsoever for previously sold products, especially those products which you didn't purchase from their shop.
This is perplexing
During the restore process, were you prompted to restore from a 'backup' or as 'new device'
did you choose new device?
have you tried contacting apple technical support?
Contacting Apple for Support and Service
Honestly, that sounds like iOS 7's Activation Lock kicking in exactly as it is designed to do. Activation Lock will require the previous owners AppleID password to be able to activate and use the device.
It sounds to me like this now bankrupt store you purchased from was selling stolen devices, and you are now stuck with one. Without that previous owners AppleID password, you will never be able to use that device.
see http://support.apple.com/kb/PH13695 for info about Activation Lock.