I totally agree with Bill.
The correct answer is the second one.
When using the reported speech, back-shifting is necessary (there are rare exceptions).
Statements in the present tense = reported speech in the past simple tense/present tense if this is still a true fact or a general statement.
I said, “my friend is an artist.”. I said (that) my friend is/was an artist. This is still true, so the present is OK.
Statements in the simple past tense = reported speech in the past perfect tense:
I said, “I went to the cinema.”. I said (that) I had gone to the cinema.
Statements in the past perfect tense = reported speech in the past perfect tense: (no change here)
I said, “I had eaten too much.”. I said (that) I had eaten too much.
Statements in the futur tense = reported speech in the conditional I form:
I said, “I will do the chores.”. I said (that) I would do the chores.
Keep in mind that there are other rules to remember about the reported speech.
I hope that makes sense.