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Criminal probe into iPhone prototype nears end

Probe into lost iPhone 4 prototype is expected to end soon, which could lead to criminal charges against man who found it or Gawker Media's Gizmodo, which bought it.

A probe into a prototype iPhone 4 purchased by a gadget blog is nearing its end, with investigators expected to report their findings soon.

Stephen Wagstaffe, district attorney for the county of San Mateo, Calif., told CNET today that "the investigation is ongoing" and he expects it could conclude as early as next month. Investigators are close to finishing their interviews and will present him with their findings, he said.

The investigation began early last year when Robert Gray Powell, a 28-year-old Apple computer engineer, left an unmarked prototype iPhone in a German beer garden in Redwood City, Calif. Brian Hogan, a 22-year-old student, found the prototype and sold it to Gawker Media's Gizmodo for $5,000. Gawker editors and Hogan could be charged with crimes.

Wagstaffe, who was elected district attorney last June, said the investigation has taken this long because his colleagues have been busy on other cases. San Mateo County encompasses part of what's known as Silicon Valley, with San Francisco to the north and Apple's headquarters of Cupertino to the south in Santa Clara County.

District Attorney Stephen Wagstaffe, in his office in Redwood City, Calif., last year
District Attorney Stephen Wagstaffe, shown in his office in Redwood City, Calif., last year Declan McCullagh/CNET

Court documents unsealed last May at the request of CNET and other media organizations show that Apple pressed local police to investigate the loss of a next-generation iPhone a day after Gizmodo published photographs, telling investigators that the prototype was so valuable, a price could not be placed on it. Apple CEO Steve Jobs formally introduced what became known as the iPhone 4 last June, and it appeared in stores later that month.

Prosecutors have confirmed that they are conducting a felony theft investigation, but no charges have been filed. They previously have said that media organizations that commit crimes should not expect to be immune from criminal laws.

A possible target of the investigation is Hogan, who could be accused of violating a state law dealing with misappropriating lost property. Another, which law enforcement officials have indicated is an option, is Gizmodo and its parent company Gawker Media. Police obtained a warrant to search the home of Gizmodo editor Jason Chen last spring.

Neither Gawker Media founder Nick Denton nor an attorney for Hogan immediately responded to a request for comment today.

Jason Chen

Gizmodo editor Jason Chen in an April 2010 post titled "This is Apple's next iPhone."

(Credit: Gizmodo/Screenshot by CNET)

Complicating the situation are allegations raised by the Reporters Committee for Freedom of the Press and other advocacy groups that police violated the federal Privacy Protection Act, which broadly immunizes news organizations from searches--unless the journalists themselves committed the crime. In addition, California law may provide protections to writers for newspapers, magazines, and "other periodical publications," a term that a state court has applied to an Apple blog before.

But courts also have ruled that journalists suspected of criminal behavior do not benefit from the legal shields that newspapers and broadcast media have painstakingly erected over the last half-century. "It would be frivolous to assert--and no one does in these cases--that the First Amendment, in the interest of securing news or otherwise, confers a license on either the reporter or his news sources to violate valid criminal laws," the U.S. Supreme Court has ruled.

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. There are no exceptions for journalists. 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.

Knowing that an item probably belonged to someone else has previously led to convictions. "It is not necessary that the defendant be told directly that the property was stolen. Knowledge may be circumstantial and deductive," a California appeals court has previously ruled. "Possession of stolen property, accompanied by an unsatisfactory explanation of the possession or by suspicious circumstances, will justify an inference that the property was received with knowledge it had been stolen." State law says that lost property valued at $100 or more must be turned over to police.

Powell's LinkedIn profile says that he's still employed at Apple. Apple co-founder Steve Wozniak publicly came to Powell's defense last year, saying "it's a bad accident that could happen to any of us."