He mentioned that he's taking the guy's mental instability into consideration. It's called empathy and compassion. That should only go so far though. Uchess, you definitely should confront the guy, but also account for his instability before you do. Calling the authorities does you little good after he's already harmed you. It may even be impossible to call them depending on how much he's harmed you. So when you do confront him, have some reassurance in the form of more others waiting very nearby (within view or earshot) yet not participating in the confrontation. They're there to protect you should the guy get violent.
I might be overreacting, but I don't know the guy and can't be sure of just how unstable he is. I'll say that him stealing from you isn't a good sign though. In my experience, if people steal from you, they don't give much of a shit about you. Meaning, they're more likely to be willing to harm you.