Oh, that poor fellow. I understand your feelings of guilt, but in this situation you have to think of your own family first. If you had paid their price and brought him home, with all his issues he likely never would have been fit/sound enough for riding so you would have ended up with a money pit in your paddock with serious dietary and probable frequent veterinary needs. A horse like that can quickly push a family with a budget over the line into a family in a money crisis.
Report the owner for what?!? Because he's thin? Looks like the owner is feeding him since he's standing by a roll of hay. I maybe wrong I can't see the other animals, but being think isn't always the owners fault.
I had a Draft that went from 1900 to 1600 because of cushings, no matter what I did.
Some concerned nosey citizen reported my dad for 5 cows that he had penned up close to the road that was very underweight. Of course this caused a big investigation and they sent out an inspector. Which cost the county money and time. The cows was penned up because my dad had just bought them the day before at the auction and left them penned on the 5 acres so he could feed them without the other 80 head of cows (that couldn't be seen from the road) wouldn't push and hurt them.
So don't report something unless you know whats going on.
What worries me with this horse, is that his health or at least his teeth have got to have something wrong, because none of the other horses in the picture seem to have any issues with lack of food. This guy on the other hand is very malnourished. He either has a dental issue preventing him from feeding enough, or he has something more serious medically that needs to be looked at before he passes from disease.