Tell your friend that you are going to file a police report if he hasn't already filed one, and that he will probably be contacted by the police for information. At that point, he may come up with either a new story, or your ATV.
If not, your next step is to go to your local police or sheriff's department and give them all of the information, including the names of the witnesses. Tell them that you are definitely willing to prosecute. If they get enough evidence, they will file charges or they might recover the ATV. You may be asked to accept restitution (if not the full price, your "friend" may be given a chance to pay back the price of the ATV in payments or you may be asked to accept less) to drop the charges. Somehow people manage to come up with full restitution if they're looking at a criminal record or jail time. Of course, you won't have this person as a friend anymore and may have to watch out for his other "friends."
Ask him if he has renters or homeowners insurance. If he lives with his parents or others, ask them if they have insurance. Check out your own insurance (renter, homeowner, parents' etc). It's possible that the theft might be covered by insurance. If an insurance company pays, it can also decide to investigate the theft and may end up filing charges itself.