Bava Kama 94a: Abaye said: From where do we see that Rabbi Eliezer ben Yaakov is of the opinion that a physical change in the stolen object does not cause the thief to acquire it? From this Baraisa: Rabbi Eliezer ben Yaakov says: If someone stole a measure of wheat, ground it, kneaded it, baked it and separated challah, how can he make the blessing? He would not be blessing but rather insulting, and regarding this Scripture says, “If one steals and blesses, he has insulted Hashem” (Tehillim 10:3).
Rava replied: How do you know? Maybe Rabbi Eliezer ben Yaakov only said that regarding the blessing, because it is a mitzvah that came through a sin.
ר’ אליעזר בן יעקב מאי היא? דתניא, ר׳ אליעזר בן יעקב אומר: הרי שגזל סאה של חטין, טחנה, לשה ואפאה והפריש ממנה חלה, כיצד מברך? אין זה מברך אלא מנאץ, ועל זה נאמר: (תהלים י׳) בוצע ברך נאץ ה׳. … אמר רבא: ממאי? דלמא … עד כאן לא קאמר ר׳ אליעזר בן יעקב התם ־ אלא לענין ברכה, משום דהוה ליה מצוה הבאה בעבירהֹ.
Rabbi Yisroel Salanter, when he lived in Vilna, made his living by saying shiurim. When he moved to Kovna, the kehillah appointed him to an administrative position. After he left Kovna, he had no source of income, so one of his talmidim began to support him. Reb Yisroel hated to have to take from others, firstly because he followed the Rambam’s opinion that a talmid chochom should never take support for his learning, and secondly because he was afraid that he was not as great as people thought he was, so they were giving him under a false assumption, and thus he was stealing their money.
Once, a rav came to visit him during a meal, and Reb Yisroel said to him, “Would you like something to eat? It’s kosher food.” The rav was puzzled, so Reb Yisroel explained with a smile, “For me it could be that the food is not kosher, since it’s stolen, but I have already acquired it by making a שינוי מעשה, a physical change, so for you the food is kosher.”
[It would seem that since we hold שינוי מעשה קונה – a physical change causes the thief to acquire the item – the thief himself is allowed to eat it too, and the only problem is making a bracha on the food. This is brought down by the Mishnah Berurah 196:4, and his conclusion is that one should not make the bracha, except for Birkas Hamazon which is a Torah obligation.
משנה ברורה קצ”ו סק”ד: אם גנב או גזל חטים וטחנן ואפאן י״א שאע״פ שקנאן בשינוי והרי הם שלו אלא שחייב לשלם לו דמים עבורם מ״מ אסור לברך ע״ז בין ברכה ראשונה ובין בהמ״ז דלענין ברכה דאית בה הזכרת השם חמיר טפי ותמיד הוא בכלל נאוץ וי״א דהואיל וקנה יכול לברך ודעת המ״א דלענין בהמ״ז אם אכל כדי שביעה יש להורות בזה שיברך בהמ״ז דהוא דאורייתא ויש להחמיר ולברך.
Accordingly, it would seem that Reb Yisroel meant that perhaps he himself should not make a bracha on the food, but the guest could certainly make a bracha. Besides this chiddush – that the prohibition on making a bracha on stolen, changed food does not apply to the thief’s guest – we also see here that Reb Yisroel considered buying food with stolen money no better than a physical change. The counterargument would be that since this is not the same item at all, but something else exchanged for it, the rule that the bracha is an insult does not apply.]
Source: Kisvei Hasaba Vetalmidav Mikelm, v. 2 p. 787