I have to agree you should separate that angel immediately or sell it back to the LFS. That looks really bad and although breeding angels is an exciting achievement, with an angel getting that badly picked on... It will die of stress before anything else.
I would suggest a 10 gallon and treat it with Melafix or a trusted medication and then find a bigger tank than that for him to be your showcase/main fish and let him be dominant.
If another tank is no option, I would recommend getting rid of him. I'm not sure even a LFS will buy a hurt fish like that :/