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Jason Chen's sloppy iPhone breakdown damaged the prototype and may have added vandalism to the list of pending charges against him and other Gizmodo staffers.  (Source: Gawker Assets)
Vandalism and sale of trade secrets are two of the top charges that may be leveled against Gizmodo's staff

Gizmodo/Gawker employees Brian Lam and Jason Chen are embroiled in a mess over the fourth generation iPhone that they purchased and then tore apart.  Lam and Chen contend that the iPhone was merely lost and that they are innocent.  Apple, however reported the phone stolen.

Documents concerning the case and the search of Chen's house have been released in the form of an affidavit pertaining to the search of Chen's home.  The damning summary of the case comes on page 12, which reads:

Suspect Brian Hogan found or stole a prototype iPhone 4G that was accidentally left at a restaurant by Apple employee Robert "Gray" Powell. Hogan identified the owner of the phone as Apple Engineer Gray Powell through the contents of the phone and through Internet searches. Rather than return the prototype phone to Powell and/or Apple, Hogan subsequently sold the iPhone Jason Chen in Fremont for $5000. Upon receiving the stolen property, Chen disassembled the iPhone, thereby causing it to be damaged. Chen created copies of the iPhone prototype in the form of digital images and video, which were subsequently published on the Internet based magazine

It's will be mighty hard for Gizmodo to dispute that, except perhaps for the phone's status being stolen.  However, Apple had reported the lost phone prototype stolen before Gizmodo found it.

Gizmodo's writers appear to have not been truthful about at least one significant detail of the incident.  In their coverage they claimed they bought the prototype for $5,000.  According to multiple accounts the real total was close to $10,000.  Detective Matthew Broad describes in the affidavit an interview with Katherine Martinson, roommate of Brian Hogan, the man who found and sold the phone:

Martinson said Hogan later showed her a camera box that contained $5000.00 in $100 US Treasury Notes. Hogan told her that the money was a result of selling the phone to Jason Chen. Martinson said Hogan told her he has received a total of $8500.00 the sale of the phone, but she is not sure of the source of the additional $2500.00. Martinson said Hogan also told her that he will receive a cash bonus from in July if and when Apple makes an official product announcement regarding the new iPhone.

(Note: There seem to be some discrepancies in Detective Broad's numbers, he probably meant $5,000 and $7,500; not $5,000 and $8,500.  The take home message, though, appears to be that Gizmodo paid more than the $5,000 they claimed.)

The affidavit also reveals:

Martinson said she and other friends attempted to talk Hogan out of selling the iPhone prototype on the basis that the sale would ruin the career of Robert "Gray" Powell (Apple engineer who lost the phone). Hogan's response to her was that it, "Sucks for him. He lost his phone. Shouldn't have lost his phone."

It also reveals that Hogan had an accomplice -- his roommate Thomas Warner.  Warner, who has a misdemeanor history, helped Hogan try to destroy evidence of the phone.  States the report:

Based upon the fact that Warner directly assisted Hogan with the removal and concealment of evidence directly related to this case, I believe it is highly likely that Warner was involved and or conspired with Hogan in the negotiation and subsequent sale of the prototype iPhone and that his efforts to conceal and or destroy the evidence as an indication of his consciousness of guilt. I also know that cellular devices like BlackBerries and iPhones function as small computing devices and that they maintain large quantities of data which include, but are not limited to call logs, email communications, system logs, GPS logs, text messages, applications, and Internet browsing history. Additionally, based upon my training and experience, I know that continued use of the devices can result in the deletion of data and or potential evidence on the phone.  Therefore, I seized the items as evidence.

Unfortunately, Warner and Hogan's attempts to hide or destroy the evidence were largely for naught, as the pair apparently had a change of heart and directed police to the evidence they had ditched.  The ditched items include stickers that identify the phone as an Apple prototype, a camera memory card, a USB memory stick, and a computer.

The affidavit also contains part of the email exchange between Brian Lam and Steve Jobs, in which Lam demands a letter of authenticity for the phone's safe return.  Jobs complied with the demand, according to the affidavit.

The affidavit indicates that Chen and/or others at 
Gizmodo will likely be charged with receiving stolen property, vandalizing private property, and sale of trade secrets.  Even if they can escape the claim that they bought stolen property, they will be particularly hard pressed to fight the vandalism charge, as it is obvious they damaged the expensive prototype.

The seller Hogan may be charged with felony theft and or sale of trade secrets as well.  And his friend Warner may be charged as an accomplice to these actions  They may find it hard to prove their innocence, given the fact that they tried to destroy evidence of their actions.

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Is this realy a crime?
By austinlvfr on 5/14/2010 8:50:49 PM , Rating: 1
I cannot believe this realy a crime givin similar situations...

The iPhone (& Jobs) is something of a celebrity, and therefor it is newsworthy. Although completely unrelated, when Pamela Anderson and Tommy Lee's honeymoon tape was stolen from their house (by construction workers who found the safe while installing new flooring), the judge ruled it acceptable because their lives were newsworthy. The judge said they should not expect the same level of privacy as the general public (ultimately they got a cut of the profits according to wikipedia but were unable to prevent it's circulation).

I think the iPhone is newsworthy and it doesn't deserve the same level of privacy as the public. It's not like gizmodo is publishing detailed info they stole from Lockheed Martin and giving it to the Chinese! Finaly if my iPhone was stolen, would anyone care? No legitimate police department would send a minute of manpower investigating my loss. Whoever is investigating this loss is letting real criminals get away while they become Job's henchmen.

RE: Is this realy a crime?
By LRonaldHubbs on 5/14/2010 9:51:11 PM , Rating: 2
Finaly if my iPhone was stolen, would anyone care? No legitimate police department would send a minute of manpower investigating my loss. Whoever is investigating this loss is letting real criminals get away while they become Job's henchmen.

Your iPhone is not a prototype containing proprietary information not yet released to the public.

Whether or not a real crime was committed -- well, let's just say that if the police didn't think there was a crime then they wouldn't be investigating. If it goes to court then it is very like that there was a crime. A judge and jury will make the final call.

RE: Is this realy a crime?
By intelpatriot on 5/15/2010 7:50:50 AM , Rating: 2
"Proprietary information" - This only applies between employer and employee or other contracted parties.

Trade secrets were made a special case and do now, as of the 1990s, have extra protection but only in the case (as has been pointed out) where every reasonable step to keep the information secret.

In this case it would hinge upon whether Apple telling an employee "remember not to drop a phone" counts as reasonble. I doubt that would hold water.

RE: Is this realy a crime?
By rtk on 5/15/2010 11:37:27 AM , Rating: 1
If it's unreleased, unannounced and Apple isn't admitting it's their prototype, it's not proprietary information. It's not even Apple's, it's Gray's.

If I mod my blackberry 8900 so that it's no longer recognizable as a blackberry 8900, when I lose it it should be returned to RIM?

RE: Is this realy a crime?
By porkpie on 5/15/2010 4:09:37 PM , Rating: 2
f it's unreleased, unannounced and Apple isn't admitting it's their prototype, it's not proprietary information. It's not even Apple's
Huh? You have it entirely backwards. If the phone and everything about it were released public knowledge, it's not a trade secret.

Hint: see the word "secret" in the phrase trade secrets?

RE: Is this realy a crime?
By rtk on 5/15/2010 6:09:37 PM , Rating: 2
Except of course, that doesn't make a lick of sense, common or legal.

RE: Is this realy a crime?
By jconan on 5/14/2010 10:10:25 PM , Rating: 2
That's probably also because of corporate influence. Steve may have more of an influence because of his attorneys where Pam and Tommy didn't have any knowledgeable in the realm.

RE: Is this realy a crime?
By sprockkets on 5/15/2010 10:23:27 AM , Rating: 2
Uh, they can afford attorneys.

RE: Is this realy a crime?
By icanhascpu on 5/15/2010 2:44:33 PM , Rating: 1
1. Do you see gizmodo shitting themselves over getting YOUR iphone. Retarded point.

2. Comparing this coverage to someone stealing national security secrets to give to the Chinese is even more fucking retarded. Stop going to tech news sites if you dont want to read about it.

3. Youre really reaching far to attempt to downplay what happens and the effects of it to a large company it can have. Thus the court system, where people a hell of a lot more reasonable than you are "realy" going to decide.

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