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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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RE: Waste of Judicial Resources
By whiskerwill on 5/14/2010 9:53:51 PM , Rating: -1
It's not like someone broke into the engineer's apartment
Why do you think that matters? Your property is your property. It doesn't magically become someone else's because you left it somewhere.

We usually ignore petty theft like having your phone stolen because you left it somewhere. But its still theft.

RE: Waste of Judicial Resources
By eskimospy on 5/15/2010 1:09:17 AM , Rating: 5
You're missing the point. In order to get someone for theft of trade secrets, you have to take reasonable precautions to protect your trade secrets to begin with. Having an engineer go out to the bar and knock back a few beers with your precious trade secret is unlikely to qualify as a 'reasonable precaution'.

RE: Waste of Judicial Resources
By StevoLincolnite on 5/15/2010 12:52:40 PM , Rating: 2
To me it's just another "evolutionary" phone (Not revolutionary). - All these headlines, all these police raids over a simple phone.

What has the world come to!?

RE: Waste of Judicial Resources
By sigilscience on 5/15/2010 5:18:49 PM , Rating: 2
It's real simple.

Was the phone his? No.

Did he know who it belonged to? Yes.

Did he make money off selling someone else's property? Yes.

He just better hope for getting off with probation and a fine.

RE: Waste of Judicial Resources
By lexluthermiester on 5/18/2010 4:37:59 AM , Rating: 2
It is not as simple as you think.

Was the phone his? No.

Did the person/company who owned the device report it stolen or lost? Not for 3 days. That, under certain legal statutes, is considered abandonment. It was left in a bar and the guy who left it there didn't own it.

Did he know who it belonged to? Yes.

This might be a valid legal point IF the phone had not been abandoned.

Did he make money off selling someone else's property? Yes.

This also might be a valid legal point IF the phone had not been abandoned.

Now do I think they needed to use better judgment? Sure. Does that bad judgment qualify as criminal behavior? Certainly not. People lose phones everyday. And while it sucks, it's life. A friend lost her iphone, twice. Once it was returned. The second time it was not. As it turns out the second time, the person who found it had called AT&T and reported it found and then held onto it. It took more than a month for them to contact my friend and let her know, by which time she had replaced it. She called the guy and thanked him for trying being honest and told him to keep it. Not everyone is that honest or can be. A few years ago, I found a Creative Zen mp3 player on the sidewalk with no one around to claim it. Local statutes for my city is to report anything of value over certain dollar amount. When I called the police to report it they literally told me it was not worth the effort and to keep it. Under those circumstances, it is legally abandoned, as was my friend's iphone.

There is a very serious difference between lost/abandoned and stolen. The folks at Gizmodo didn't use the greatest of thinking power when they made the choice to buy the phone, but no crime was committed.

This should also be an interesting read;

Apple has manipulated law enforcement and the courts to see "their" point of view. Reality is something different.

By Mojo the Monkey on 5/19/2010 7:04:09 PM , Rating: 2
I think your argument about what abandonment is fallacious. Abandonment, in whatever jurisdiction or context you're talking about, has a lot to do with the mental state of the person doing the abandoning. If he did not intend to leave it out of his control, its not abandonment.

Not filing a police report may help you argue that abandonment occurred, but there is no way that its enough by itself. Lots of people lose things and dont report those items stolen. Those objects are not abandoned. That fact, alone, will make a simple lack of reporting insufficient to show abandonment and, therefore, not really a good argument for you to make here.

RE: Waste of Judicial Resources
By inighthawki on 5/15/2010 1:51:29 AM , Rating: 4
If that were the case you could just give a bunch of employees new prototypes and "leave" them places, then sue dozens of people if they say anything about it.

RE: Waste of Judicial Resources
By Solandri on 5/15/2010 3:30:33 AM , Rating: 2
We hashed over this last time. California law is quite clear about this. If you find lost property, you have to make a good faith effort to return it to the owner, or the establishment where you found it (so they can try to track down the owner). If you can't do that, you have to turn it over to the police (after some period of time, if it's unclaimed, it becomes yours). If you don't do these things, which appears to be what happened in this case, the item is considered stolen.

While it's in your possession, you'd be free to take pictures of it and (if you were really careful) probably disassemble it. If these guys get good lawyers, they might be able to get off arguing that Gizmodo simply paid for the rights to access, photograph, and handle the phone. But from everything I've read it sounds like they bought the phone, which makes it trafficking in stolen goods.

Mind you I'm not happy that Apple was able to use its legal clout to get a police raid of Gizmodo's office, when the police took over a day to send someone to investigate a burglary at my dad's office. But legally, Gizmodo is on very shaky ground.

RE: Waste of Judicial Resources
By porkpie on 5/15/2010 11:27:42 AM , Rating: 1
From another story on the subject:
Hogan reached out to several publications and websites “in an attempt to start bidding for the iPhone prototype,” according to Broad. “Martinson said Hogan understood that he possessed a valuable piece of technology and that people would be interested in buying it.”

Martinson said she and other friends tried to talk Hogan out of selling the prototype, arguing it would ruin the career of the Apple engineer who lost it, Broad said in the affidavit. “Hogan’s response to her was that it ‘Sucks for him. He lost his phone. Shouldn’t have lost his phone.’”

Gizmodo Bonus
Hogan was to receive a cash bonus from Gizmodo in July if and when Apple makes an official product announcement about the new iPhone, Martinson said, according to Broad’s affidavit.
I know the irrational hatred Apple engenders, but I really don't understand how anyone can condone this sort of behavior.

RE: Waste of Judicial Resources
By InsaneGain on 5/15/10, Rating: 0
RE: Waste of Judicial Resources
By Chaser on 5/17/2010 8:22:51 AM , Rating: 4
I agree that Apple has changed the entire playing field with the iPhone. But I think the resentment stems from a few reasons.

1. The Draconian controls that Apple bakes into its products.
2. The "Fischer Price" technology experience that attracts 14 y/o teenagers to buy an iPhone as a fashion, texting/phone device. Similar to a compact held in purse.
3. The Apple smug factor that draws it's lemmings to a product mostly due to campy ignorance rather than technological edge.

feel free to add on more folks.

RE: Waste of Judicial Resources
By wiz220 on 5/16/2010 3:03:26 PM , Rating: 3
Possession is nine-tenths of the law ;)

RE: Waste of Judicial Resources
By DM0407 on 5/16/2010 9:06:38 PM , Rating: 5
Possession is nine-tenths of the law ;)

Glad someone said it! This is like the "But can it play Crysis?" of stolen goods.

I think all parties involved are in a tough position here, including the police who apparently care more about finding stolen property for Big Biz than keeping the community safe.

On a scale of 1 to 10. This should been a 1 for the police.

"My sex life is pretty good" -- Steve Jobs' random musings during the 2010 D8 conference

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