Why don't you call animal control? If this person is a known animal abuser and should not have animals around, then animal control will intervene.
As for the dog you have now - you're doing the right thing and helping that poor thing. Animals cannot fend for themselves, they have to rely on us to help them and you most probably saved his life.
Do not give the dog back, under any circumstances!!!
If you cannot keep the dog then give him to a no kill shelter, humane society or animal shelter. They will try to get him adopted!
Please call animal control so they can check on this person and get all the animals out of the house.