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The player was banned, not the character/s. Your staff offered him a second chance to start over, but obviously he wants more than that. However just because one of his characters avoided attention when the original punishment was meted out, that doesn't give him any "right" to keep the character now. It was an unfortunately oversight at the time, but I think it should be obvious even to him that he's not really supposed to have that character. Explain to him politely but firmly that a new start means a new character - it's not about "repenting", it's about making it clear that a punishment is a punishment, and it's not something that will be ignored just because the decision was made a long time ago and wasn't fully carried out. If you let the punishment slip it will set a bad precident, both with him and with others who are punished in the future, and you'll quickly find yourself accused of favouritism or the like.
In my experience, troublemakers rarely change their attitude, regardless of what excuses they might make, but it's up to you whether or not you give him a second chance. Just make sure you keep an eye on him.
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