Police Computer Crime Task Force Probes Gizmodo/iPhone 4G Prototype Incident

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A local police task force is probing Apple’s lost-iPhone 4G prototype to see if there are grounds for criminal charges to be filed. The probe revolves around whether any local or state laws were broken when Gizmodo purchased an iPhone 4G prototype earlier in April after the device was accidentally left in a San Jose bar.

According to CNET, The Rapid Enforcement Allied Computer Team of Santa Clara County, also known as REACT, is looking into the incident, which unfolded earlier in April. The site reported that it is not yet known if the probe is aimed at Gizmodo, its parent company Gawker, or the person who found the phone and then sold it to Gizmodo for US$5,000.

Gizmodo published videos of the device, which showed a new form factor and new materials for the front and back of the device. The site also acknowledged that it paid for the device, and returned it to Apple after the company’s legal department demanded its return.

A myriad of laws might apply to the situation, including a 138 year-old California law that makes it a criminal act not to return property known to belong to another party. Various federal laws could also apply, as might certain protections offered the press at both the state and federal level.

A legal contact pointed out to The Mac Observer, however, that a police investigation suggests that Apple did report the matter to the police as a possible crime.

REACT is a task force that works with local tech firms in Silicon Valley. CNet noted that Apple worked with REACT when it was discovered an employee had sold more than $100,000 of stolen Macs through eBay.

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Comments

Khaled

Justice wink

Lee Dronick

Justice

Well not yet. They are still conducting an investigation to see if charges can be filed.

Khaled

Well not yet. They are still conducting an investigation to see if charges can be filed.

It will be fun to watch though smile

it will be boring until WWDC

Bosco (Brad Hutchings)

Get ready to be disappointed. The phone was returned in due course when Apple identified it as actually theirs.

If criminal charges are filed, good luck getting a jury comprised of all Mac fanboys. Because that’s what you’ll need to get a conviction if no additional facts surrounding the original finding of this device are discovered and the guy sticks to his story. The law on this was not written in a time when the finder could have looked up the owner on Facebook. The dollar amounts set in law are absolutely trivial now. We cannot afford to have our criminal court clogged with petty thefts, especially under indirect theories of theft because doing so offers too much incentive for abuse of the criminal complaint process.

Should Apple sue Giz under some trade secret theory, sure it will cause all sorts of trouble for Gawker Media, but it will unite all the civil liberty groups behind Giz. And like the last time Apple tried to deputize a website to keep its secrets, Apple will just lose on appeal. Keeping Apple’s trade secrets secret is Apple’s job, not the rest of ours.

Before I leave the fanboys here alone to set the town on fire, let me leave you with this. If some Apple engineer leaves his iPhone prototype at Denny’s tonight, I’ll take a whole bunch of pictures of it with my 5 megapixel Nexus One (with flash enabled if helpful) and send them to Bryan. You’re welcome.

John Horvatic

Uh Bosco, it had an Apple logo on the back. They knew it was Apple property, they paid 10 grand because they knew it was Apple property. They knew it was a prototype. They published a big story on the web for Apple’s legal team to use as evidence to the fact they knew it was Apple’s property.  So I think Apple has a case. Based on what they knew, why didn’t the person who originally found the phone turn it in to Apple right away? But no, he contacted Gizmodo instead and sold something that wasn’t his to begin with.
You don’t need to be a fanboy to see the facts spread all over the internet.

Bosco (Brad Hutchings)

John, Three facts that complicate your slam dunk fantasy. (1) They paid $5000, not $10,000. (2) Plenty of Chinese KIRFs have Apple logos. Some examples are here. (3) Apple got their phone back once they confirmed it was their phone.

Fanboys want someone prosecuted because Apple’s secrets got spilled. That falls under the law of tough beans. Most of you had absolutely no idea what the relevant law regarding found property was in California. Certainly most Californians have no idea. Did you know that public transportation systems in the state typically contract with non-profits to run their lost and founds, with the non-profits allowed to dispense of property as they wish after a waiting period, and with very little of the property reclaimed by its original owner? They have no responsibility to do extraordinary work to track down owners. A purse or wallet merits a phone call if it includes contact information. A cell phone or bike, never. I have a friend who ran one such program that made a lot of money selling unclaimed bikes to the public and unclaimed phones to recyclers. Hundreds of bikes per month. Hundreds. Boxes and boxes of personal electronics.

Before you get all high and mighty about this, just consider what burden you would be putting on anyone who happens to find anything if they could end up legally culpable for not tracking your ass down to give it back. The finder said he tried and was rebuffed by an Apple rep. If true, end of story.

Maybe Apple needs to add a sticker to its prototype phones: “Apple Design Prototype. If found, please call 1-800-OHH-SH*T ext. F-ME”. It would solve some of the ambiguity the finder faced.

gslusher

Bosco:

We can be absolutely sure of one thing about the “finder”: whether or not he knew to whom the phone belonged, he knew that it did NOT belong to him. Yet, he SOLD it.

As for the dollar amount being “petty,” it might not be. Gizmodo set a sort of “fair market value” on the phone when they bought it. $5,000 is not “petty” by any stretch.

Also, Apple may not have to rely on “trade secrets.” Look up “conversion.”

http://www.lectlaw.com/def/c309.htm

http://en.wikipedia.org/wiki/Conversion_(law)

digitrunner

Ok I have to ask the obvious, is it normal Apple policy to have their employees walk around with prototypes of Apple products in their pockets? I’d have to say no and that the find in the bar story is bullcrap this was obviously masterminded by an Apple employee so the theft occured on Apple’s turf, its funny there’s no mention of the circumstances as to how this phone was out of the labs and into a bar.

Lee Dronick

, is it normal Apple policy to have their employees walk around with prototypes of Apple products in their pockets?

I would think that they test iPhones out and about.

If this goes farther than an investigation you will bet that the defense attorneys will be asking why the phone was out of the lab.

gslusher

If this goes farther than an investigation you will bet that the defense attorneys will be asking why the phone was out of the lab.

They might ask, but it would be irrelevant, or, as Perry Mason might say, “I object, Your Honor. The question is irrelevant, immaterial, and not in the script.”

Lee Dronick

Sir Harry Flashman said:If this goes farther than an investigation you will bet that the defense attorneys will be asking why the phone was out of the lab.
They might ask, but it would be irrelevant, or, as Perry Mason might say, ?I object, Your Honor. The question is irrelevant, immaterial, and not in the script.?

I am thinking maybe he wasn’t authorized to take the prototype to certain places. Or perhaps the engineer was in financial trouble and lost it on purpose.

Nemo, thoughts?

gslusher

I am thinking maybe he wasn?t authorized to take the prototype to certain places. Or perhaps the engineer was in financial trouble and lost it on purpose.

I don’t think that either would be relevant to the case, unless there were a conspiracy between the engineer and the “finder.” If there were no conspiracy, there would be no way for the engineer to benefit. it would be more likely that he would be fired or transferred to a boring job.

The engineer’s actions prior to losing the phone shouldn’t matter.

Consider this scenario: Bosco goes into a fast food restaurant. He sets down his camera bag on a table, then goes to the restroom. Someone else comes in (and thus did not see Bosco), sees the camera bag, picks it up and walks out. He heads to a pawnbroker and sells the camera bag & contents for $1,000.

Was a crime committed?

Does it matter in regards to a crime by the “finder” (not to Bosco’s potential liability) if:

- Bosco were going to take photos of birds or his kids or a car show?

- the camera actually belonged to Bosco’s best friend, who loaned it to Bosco?

- the friend told Bosco not to take the camera bag into the restaurant?

Lee Dronick

unless there were a conspiracy between the engineer and the ?finder.?

That was my perhaps.

Bosco (Brad Hutchings)

@gslusher… Well, that would be a pretty stupid on Bosco’s part, wouldn’t it? So suppose Bosco comes out of the restroom and discovers his camera missing. He asks the waitress and other patrons if they saw who took it. Perhaps they did, perhaps they didn’t. Bosco calls the police, who arrive an hour or so later, and they take a report. Maybe Bosco whines that the camera he left unattended has important pictures, and the cops are like, “ok sir, all we can do is take the report, so you really left it unattended and went to the restroom?”

Look guys. I live in a very nice community in The OC. I once came home to find two older kids / borderline adults had broken into my garage and were hiding there, intending to break into my house. I had them in custody with the help of a couple neighbors, called 911, and the cops did not get there for an hour, no lights and sirens. By then, the kids decided to make a run for it and got away from us. I’d imagine that if some dude at a bar lost his iPhone prototype, the cops aren’t going to show up and do body cavity searches on all the patrons.

I’m accepting the given stories in the iPhone case as close enough to reality. They are plausible and all the parties involved would have to be stupid to deviate from the story if it’s not true. So short any additional witnesses or evidence, that’s the story we have to work with. The “crime” you guys all want to give somebody the death penalty for is the divulging of Apple’s secret. Any actual crime that occurred toward that end, if you take the narrative as mostly true, is entirely petty and probably innocent. It wouldn’t warrant any more investigation than taking an after the fact report. And you all know it.

Dave Hamilton

I was on vacation while this all unfolded, though I watched it peripherally through Twitter.

I’m still not sure why everyone is so up in arms about what Gizmodo did. After all, isn’t the info they posted exactly what everyone wants to know? Apple works hard to keep this stuff secret, and we all want to know what the secrets are. It seems there might be some iffy legal ground here, but history shows that *rarely* (if ever) goes against the press.

I’m just confused by the public outcry and support of Apple in this one. Didn’t we go through this with Think Secret years ago and decide that Apple needs to be Apple, and we all need to be, well, us?

Khaled

I have no issue with the iphone 4g details. I am annoyed at Gizmodo for publishing photos from the employee’s facebook page.

gslusher

I?m still not sure why everyone is so up in arms about what Gizmodo did.

Because there may be one or more actual property crimes involved: theft, misappropriation of lost property, receiving stolen goods, etc. What Gizmodo did is NO different than buying a camera someone said that they “found.”

The ?crime? you guys all want to give somebody the death penalty for is the divulging of Apple?s secret.

Where did I say anything like that? I have referred only to possible property crimes.

As for your response to my scenario, you missed the point. FWIW, last November, someone stole camera gear from my car in my garage—which made it burglary. Is it likely that anyone will be caught? No. However, if someone were to be caught, they could be prosecuted. The fact that my car was unlocked & the garage door was partially open would make NO difference, according to the police.

In this case, the people involved are known. (They essentially “caught” themselves.) If there was a crime committed, the DA may choose to prosecute, if there is sufficient evidence. The actions of the Apple engineer would be irrelevant to the case.

daemon

Of interest is the fate of the Apple Engineer who allowed the iPad to be photographed the night before Steve Jobs announced it to the world. He was fired.

Keep in mind, it was the “3G” model, one of the people he showed it to was Steve Wozniak (along with a couple guys who read Gizmodo), and apparently he also allowed a proto-type iPhone to be pictured too (not that anyone had noticed it then).

Seward Johnson

As for the dollar amount being ?petty,? it might not be. Gizmodo set a sort of ?fair market value? on the phone when they bought it. $5,000 is not ?petty? by any stretch.

You are correct!  In fact, $400 is the amount that turns both of the criminal violations that seem to have occurred (theft of lost property and purchase of stolen property) from misdemeanors into felonies.  So, no petit (which is the derivation of “petty”) larceny, but grand larceny.

The California Penal Code statutes on both these crimes are very clear.  If you find property, you don’t own it unless you follow some very specific steps (including turning it over to the police for 90 days plus 7 days after the police publish notice of having the lost property) - if you keep it or sell it without making reasonable and just efforts to locate the owner - you are a criminal under the law.  If you buy such property, and know or should know that the property was so stolen (and Gizmodo admits that they knew all of the facts), then you, as purchaser, are a criminal under the law.

To me, it is amazing that people don’t intuitively know this (or make uninformed “personal feelings” comments when they don’t know the law).  This is one set of laws that you don’t need to google on Wikipedia - the California Penal Code is online and ready for reading.

daemon

Then here’s the real question Seward Johnson: Why isn’t every member of the LA public transit system that is involved with selling the lost items of passengers being charged with grand larceny?

Bosco (Brad Hutchings)

@daemon… Because the IANALs haven’t caught up with them yet?

Brett

I am an Apple Fanboy but this is ridiculous.
The only viable purpose of an investigation is if the Apple Employee knowingly transferred the phone or if the phone was actually stolen from the employee. Otherwise, sorry Apple.

Lee Dronick

The only viable purpose of an investigation is if the Apple Employee knowingly transferred the phone or if the phone was actually stolen from the employee. Otherwise, sorry Apple.

I don’t think so Brett. The purpose of the investigation is to determine if a crime occurred. “A myriad of laws might apply to the situation, including a 138 year-old California law that makes it a criminal act not to return property known to belong to another party. Various federal laws could also apply,”

gslusher

The only viable purpose of an investigation is if the Apple Employee knowingly transferred the phone or if the phone was actually stolen from the employee. Otherwise, sorry Apple.

Suppose you are in a restaurant. You forget to take a bag containing a new camera that you had just bought. Someone finds the bag, sees what is inside, and takes it. He then sells it to a pawnshop. Would you consider that the camera had been stolen from you? That’s what happened here, if the reports are accurate.

Bosco (Brad Hutchings)

And again gslusher, if you can get the authorities’ attention, they’ll give you five minutes and take a report. They aren’t going to dispatch the computer crime task force or call the Hardy Boys in as consultants. Nor will they be performing complimentary colonoscopies on all the patrons that were in the restaurant at the time.

You may want to live in a society where we are all sworn to uphold Steve Jobs secrets should we come in contact with them. Excepting for Brett’s scenario above, I am glad that Giz did what it did the way it did it, because it puts that expectation in check. Security over its secrets is Apple’s job, not Giz’s, not mine, nor anyone who frequents bars on the peninsula.

gslusher

And again gslusher, if you can get the authorities? attention, they?ll give you five minutes and take a report. They aren?t going to dispatch the computer crime task force or call the Hardy Boys in as consultants. Nor will they be performing complimentary colonoscopies on all the patrons that were in the restaurant at the time.

You missed the point, yet again. In this case, the police KNOW who was involved—no colonoscopies needed—the “perps” identified themselves. For the police to NOT investigate it would be a dereliction of duty. They may decide that there is insufficient evidence for a trial, but that can be done only after an investigation. Remember that I am only talking about the property crime, so your snide remark about being “sworn to uphold Steve Jobs secrets” doesn’t apply.

I mentioned before that, last November, two bags with camera gear were stolen from my car in my garage. The police aren’t going to waste much time investigating the crime, but, suppose the thief posted on his Facebook page that he “found” the gear and the pawnshop he sold it to issued a press release saying that they had bought the gear and noting that one of the bags had my business card in it. The police would have to investigate.

Bosco (Brad Hutchings)

I’m lost. Your hypothetical camera bag jacker in your 2:39pm post identified himself? I missed that part. Nobody is saying don’t investigate—the iPhone incident. It appears that there is an investigation of some sort. Perhaps that investigation is into the narrative. So long as everyone sticks to the narrative (easy) and no additional witnesses materialize (unknown), this ain’t going anywhere. And if it does go somewhere with a substantially unaltered narrative, just expect the most elaborate petty theft defense in the history of law, with the ACLU, EFF, and every First Amendment group weighing in, with an ultimate acquittal.

I still say that most of you are at least lying to yourselves if you think, with the facts at hand now, anything will come of this. You’d like it to because of Saint Steven’s glorious secrets, not because you want prisons overflowing with bar hoppers who take found things home with them. Honestly, true or false?

Voice

Actually, Bosco, if you read the applicable CA statues (both criminal and civil), you’ll see that the facts as laid out in the Gizmodo articles are sufficient to convict both the ‘finder’ and Gizmodo of grand larceny and receiving stolen goods respectively.

CA civil law lays out explicitly the steps that must be taken before an found item worth more than $100 can be considered the property of the finder.  One of those steps is that the property must be turned over to the police, who will hold it for 90 days so that the owner can claim it.  That was not done.  We know this because Gizmodo’s articles point out that the time period involved is about a month.

At the point the finder sold the found iPhone, he sold someone else’s property.  That is, by CA criminal statute (and any reasonable definition), theft.  What’s worse, when the finder sold the phone, he actually told Gizmodo that it wasn’t his, and he told them the name of the actual owner.  Gizmodo bought it anyway.  That is, they knowingly purchased stolen property.

All this is based *only* on CA statutes and the story Gizmodo told the public before any investigation.

There is the possibility of a civil suit regarding the exposure of Apple’s trade secrets, but that has nothing to do with the matter of the phone being stolen, and Gizmodo knowingly purchasing stolen property.

Bosco (Brad Hutchings)

CA civil law lays out explicitly the steps that must be taken before an found item worth more than $100 can be considered the property of the finder.? One of those steps is that the property must be turned over to the police, who will hold it for 90 days so that the owner can claim it.? That was not done.? We know this because Gizmodo?s articles point out that the time period involved is about a month.

OK Voice, you have copied the letter of the law, probably from Gruber. The question I have is how this squares against, for example, how public transit systems handle and dispose of found property. Typically, they let non-profits run the lost and found and dispose of property, all without involving the police. As I said before, I have a very good friend who ran one of those for several years. Very rarely did they have enough information to contact owners. Even when contacted, very rarely was property claimed. That’s an example where the letter of this law just completely breaks down into unfeasibility. If I had a picture of the backlog of just bicycles waiting their claim period to be sold, you’d have a better idea of the problem.

Apple got their actual, physical property back. Again, what has everyone in a tizzy (to paraphrase Bryan paraphrasing me) is that a secret was lost. If this has turned Apple fans into the Lost and Found gestapo, and now, if you find something worth more than $100, you can have the REACT team breaking into your house and taking your computers, don’t expect anyone to do anything but throw found property away. It will not be worth the trouble to wait in line with 10,000 other finders at the police station. It will not be worth the risk of having not followed the exact letter of the law to contact owners or hold in your position for them. That’s the world you’re asking for going down this tangent to protect a private secret with which the owner was criminally careless.

toneii

I would estimate that Apple is going to be sued for damages by the Chens.

Recall the time line:
 
Apple repeated lies about existence of the missing prototype, thereby preventing its proper return for weeks.

Finally a third party technology expert has to deconstruct the phone to prove that Apple is the owner.

After being caught in their lies, Apple relents, comes clean and finally agrees to take the phone back.

Meanwhile, the might Wurlitzer of Apple propaganda is grinding overtime to damage the reputation of Chen and Gizmodo, by calling them criminals and using the word “stolen”, when all along this entire thing was their own doing.

They foolishly exposed that they have the undue influence to call out a private police force called REACT - on which they sit as a board member - to harass and further malign a couple to cover up their own neglegence in losing their trade secrets.

Severe penalties need to be levied against this company to teach them a lesson in ethics and responsibility.

Lee Dronick

They foolishly exposed that they have the undue influence to call out a private police force called REACT

REACT is not private!

“A partnership of 17 local, state, and federal agencies, with the Santa Clara County District Attorney’s Office designated as the lead agency. The REACT Task Force is one of five in the State of California and authorized under California Penal Code 13848.

All Agents of the React Task Force are either California Peace Officers and/or U.S. Federal Agents.

REACT was established in 1997 by the California State Department of Justice, in response to both public and industry concerns over the spread of new types of crime directly tied to our increasingly computer-oriented economy and widespread use of the Internet. High tech companies and industry councils provide specialized training, liaison personnel and internal support for task force investigations.

By creating a multi-jurisdictional team that combines resources and specific investigative skills, along with federal jurisdiction to conduct investigations across state and international lines, and a close working partnership with the high tech industry, REACT has been able to arrest and prosecute a wide range of criminal offenders and provide a more effective level of service to local communities and the high tech business community.”

toneii

REACT acted in the PRIVATE interest of APPLE.  There was no crime, they had no jurisdiction.

Lee Dronick

REACT acted in the PRIVATE interest of APPLE.? There was no crime, they had no jurisdiction.

You are incorrect.

toneii

You are incorrect.

REACT was so scared about their own illegal actions that they have declined to actually SEARCH the seized items because:

“The computers are not being examined to make sure we don’t invade anybody’s privacy,” Wagstaffe said.

http://blog.seattlepi.com/techchron/archives/203608.asp

Your position in support of “overREACT” is laughable. In consideration of your position, we are asked to believe that breaking down someone’s door, detaining them and taking their possessions is not an invasion of privacy!

Pathetic.  Get ready to see these overzealous thugs pay for their crimes against society.

Bosco (Brad Hutchings)

@toneii… Imagine if the REACT thugs had gone Cheye Calvo on the Chen’s dogs (if they had any). This raid was so over the top, for either a very minor criminal matter or a purely civil matter of any size.

(You’ll notice by the Cheye Calvo reference that this is something I have long cared about deeply, regardless of the Apple connection. I’m even disappointed and surprised that with Steve Jobs involved, it got to this.)

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