God this sucks!! Seems like your hands are tied and I'd hate to be in your shoes or your sons. I wouldn't have let him take the ipad out of the house though being such a high ticket item to be honest. My kids have ipads and under no circumstances do they leave the house. I don't care whether they like it or not. It is to avoid situations like this and that I would be sick if a $700 item were to go walk about or get broken.
Only on one occasion has my son taken the laptop to a friends when it was just the two of them and they wanted to play an online game together on two separate machines and I spoke to his mom prior to sending it. Obviously a much harder item to get stolen and sneak in a bag being full size. My son was also told that this was a privilege and should it become broken, he owed me the cash to replace it so he better look after it.
I understand that there is no proof of who took it, but if there is no consequence or opportunity to be held accountable for taking it, guess what, where is Peter's incentive to grow a conscience? There is none. He has gotten away with it, and because no one is taking extra steps that effect him, he is laughing his ass off and will do it again. I GUARANTEE!! I had a huge problem with stealing as a child until I was about 14 and it's only when I was confronted by police and admitted my problem that I got help and stopped before it destroyed my life and became and adulthood issue. I had a very traumatic childhood and unbeknownst to anyone else I had lots of causes to act out in such a manner. I think it's also in Peters best interest to be confronted by the police too. He needs help and likely isn't getting it at home. Maybe it wouldn't be a bad thing if the police questioned everyone at this party. There would be no hiding from the fact that SOMEONE stole it and while it may not make the ipad miraculously appear, it may be the first step to helping prevent this kind of thing happen again.
Also, keep checking in on the location app for the iPad. I doubt this kid will be able to restrain himself enough long term to not charge that ipad so you may eventually find it. If the police were to be involved, even just to question the boy and his family and then it were in fact to turn up at his house or on his person, that would be a great opportunity for Peter to have his comeuppance.