On March 28 Wired.com reportedly received an unbelievable email claiming that a tipster had obtained a misplaced fourth generation iPhone.  According to the site, they entered a brief discussion about coverage on the device.  The discussion quickly terminated though when the source start hinting he wanted money. Wired declined to buy possibly stolen property and thus walked away from the year's biggest tech scoop.

Gizmodo on the other hand had took the bait.  Now, not long after police raided the home of a Gizmodo editor, police reportedly have located the seller as well.

A source close to the transaction is quoted by Wired.com as claiming that the seller made an earnest effort to return the phone to Apple.  They claim they tried to contact Apple and searched for the iPhone user on Facebook, but couldn't find them.  

They claim the $5,000 "sale" described by Gizmodo was really merely for an exclusivity agreement, not the sale of the actual device.  Describes the source, "The idea wasn’t to find out who was going to pay the most, it was, Who’s going to confirm this?"

The finder is reportedly a college-aged Silicon Valley man.

If the search warrant against Chen is any indication, the man may soon face criminal charges.  Police obviously aren't buying the exclusivity fee claim, particularly after Gizmodo admitted in writing to buying the phone and numerous staffers at the site commented on the device's purchase, including site owner and Gawker President Nick Denton.

The police reason that if the finder wanted to return the phone, why didn't he just turn it in to police?  That, after all, is the legal approach if you discover something valuable that didn't belong to you.