iPhone theft suspects enter no-contest plea

Two men pleaded no contest today to theft of lost property in a case involving last year's iPhone 4 prototype, which Apple claimed was so valuable that a price could not be placed on it.

The men, who were accused of selling the device to gadget blog Gizmodo last year, were sentenced to one year of probation, 40 hours of public service, and a requirement that each pay $250 in restitution to Apple, San Mateo County District Attorney Steve Wagstaffe told CNET.

Brian Hogan, the man who allegedly found the prototype in a bar, and Sage Wallower, who allegedly helped Hogan shop the device around to technology sites, were charged with misdemeanor theft in early August. They allegedly obtained the prototype iPhone 4 after Robert Gray Powell, an Apple computer engineer who was 28 years old at the time, left it in a German beer garden in Redwood City, Calif., about half an hour's drive from Apple's Cupertino headquarters.

"We asked for some jail time," Wagstaffe, the district attorney, said today. "The judge considered that Wallower had served in the armed forces and Hogan was enrolled in San Jose State, and neither had any criminal record, and decided that jail time wasn't required. Someone from my office called Apple's general counsel. This is a fairly routine theft case. This was a couple of youthful people who should have known better."

An Apple spokesman declined to comment this afternoon. Last year, in response to arguments made by CNET and other media organizations, a judge unsealed documents (PDF) revealing that Apple pressed local police to investigate the loss of a next-generation iPhone a day after Gizmodo published photographs. "People that would have otherwise purchased a currently existing Apple product would wait for the next item to be released, thereby hurting overall sales and negatively effecting Apple's earnings," Apple attorney George Riley told detectives at the time.

A no-contest plea is effectively the same as pleading guilty. It allows the court to find the defendant guilty of a crime and results in a criminal conviction. The primary difference is that the admission of guilt can't be used in a civil lawsuit against Hogan and Wallower, which Apple could choose to pursue.

Then-Apple CEO Steve Jobs personally contacted Gizmodo editor Brian Lam to request the fourth-generation phone's return on April 19, 2010, the day the story was published, but Lam refused to do so, unless the company provided "confirmation that it is real, from Apple, officially," according to an e-mail message that was also made public. Lam said in an article last month that he later apologized to Jobs but didn't regret paying for the story: "I will not regret things professionally. The scoop was big. People loved it. If I could do it again, I'd do the first story about the phone again."

Prosecutors obtained a warrant to search the home of Gizmodo editor Jason Chen, and they indicated that they might prosecute Gizmodo, but they eventually decided not to file charges.

Wallower, a former Navy cryptologic technician who was scheduled to graduate from University of California at Berkeley in 2010, told CNET last year in an in-person interview at his home: "I didn't see it or touch it in any manner. But I know who found it."

Under a California law dating back to 1872, any person who finds lost property and knows who the owner is likely to be--but "appropriates such property to his own use"--is guilty of theft. In addition, a second state law says any person who knowingly receives property that has been obtained illegally can be imprisoned for up to one year.

This case is separate from an investigation involving another unreleased iPhone. CNET reported in August that an employee lost control of another unreleased iPhone at Cava22, a Mexican-theme establishment in the city's Mission District, and Apple security tracked it to a nearby home but did not find it.