Personally, I think by not going to the police he wants us to give him "advice" on how to get an early upgrade by fooling AT&T. Honestly, who wouldn't just file a report with the cops so you could get a new phone right away. The whole payback thing makes zero sense anyway because that causes drama as well.
If you know who did it, definitely file a police report. It's not drama if they're not your friends, it's justice.
I believe you are eligible for early upgrade after 1 year, but I'm not sure.