Our son brought us my ring that he had taken from my things and told us that he had found it. When asked where he found it he made up a story that he had found it several days prior at the library. This is the second time this has happened. Many months ago he brought us a different ring that he had taken from my things and he said that he found it in the road. I think the reason he even brought it to us is because he knew he couldn't wear it unnoticed.
When I confronted him about the lying he denied it. I showed him the little box with the rings where he had taken it from and told him that the ring was in here, now you have it. After spending some time alone in his room I think he realized that we knew the truth and if he wanted to move on he would have to admit it - and so he did.
He is curious and gets into things. He has asked us in the past if he could have one of my rings but they were too big. We took him to buy rings with money that he earned but he fiddles with them and lost them.
I want to convey the seriousness of lying and stealing without encouraging him to hide things from us altogether.
At this point the plan is that he will loose some privileges for about a week (he doesn't know which ones yet). When the cousins come over and play on the game console he will do chores. That sort of thing. Game console is normally reserved for Saturdays and a visit from cousins is very special. He is a social hound so he will not like this at all.
We've had several incidents where he's taken travel snacks from the pantry. When we find the wrapper in his pocket or stuffed in his drawer and confront him on it he flatly, emphatically and repeatedly denies it.
There have been many issues with him trying to manipulate parents and grandparents by telling different things to one and the other to orchestrate some event. The lying is sometimes so obvious - I can be standing right next to him when he pokes his brother in the eye for instance. Then turns to me and says "I didn't do it". He then continues to deny it even though I watched him do it.