I say report him to the FBI (copyright infringement) and the US Postal Inspection Service (mail fraud). No one likes to be a snitch . . . but blantantly selling copies of copyrighted material to unsuspecting customers is a far cry from copyright infringement bordering on fair use (i.e. making a copy of a 20 year old game from a defunct publisher for a friend).
EDIT: Speaking of copyright infringement, just pretend you can't see the trademarked Sega Swirl in my avatar.
Trev