Yeah, it's super simple. Back when I had a rooted Droid, I used to run Bugless Beast on it. Every time there's was an update pushed out by Verizon, we would get nagged on our phones about it until the Dev posted a "fix" that you could download and flash for the expressed purpose of changing that number so Verizon would think we'd already received the update. That would buy both him and the users some time while he took the ROM they were pushing and tweaked it. So, that's likely what happened on the phone you bought. They likely rooted it, and then flashed a file that tells that screen to show 4.1.1 instead of 2.3, while apparently changing nothing else.