Yep!
If he had the title in hand, there was no lean on it. So he's blowing smoke on where the money really went.
I would straight up tell him to give me my money back or see him in court.
The bike was advertised AND sold as a CLEAR TITLE vehicle. Anything else is a breach of contract/sale agreement. Call a lawyer but I'd be willing to bet he either returns your money or faces the penalties. I hope you have a bill of sale or copy of the ebay/craigslist add stating everything you were told?
If the seller really didn't know, then he needs to go after the person that sold him the bike for the difference you may feel you are owed (if you even keep the bike).
This is a prime example of why I don't like buying used bikes. You never know 100% the history on the vehicle regardless of how much homework you do....