The Associated Press

SAN FRANCISCO – Brian Hogan’s world closed in fast almost as soon as he sold the next-generation iPhone from Apple (Nasdaq: AAPL) he found in a Silicon Valley bar to a popular technology website for a stack of $100 bills, according to court documents released Friday.

By April 19, Hogan’s roommate had tipped off investigators that he was at the center of the drama, Apple’s top lawyers were meeting with police to press for criminal charges and Steve Jobs himself was personally demanding the iPhone’s return.

The ordeal has set off ethic debates in journalism and law enforcement circles while Hogan and a website editor are now at the center of a criminal investigation that has been rife with speculation but devoid of many facts – until now.

On Friday, San Mateo Superior Court Judge Clifford Cretan ordered unsealed a 10-page sworn statement with details written by San Mateo Sheriff’s Detective Matthew Broad to obtain a warrant to search the car and home of Jason Chen, a editor. Broad’s statement was used to obtain a search warrant for Chen’s home and car.


According to the statement, the saga began March 25, when Apple engineer Robert "Gray" Powell left the iPhone prototype in the bar area of Redwood City’s Gourmet Haus Staud restaurant.

(According to Gizmodo, the device was left at a bar by Powell, a 2006 graduate of N.C. State. plus the and the )

(“Apple Software Engineer named Gray Powell” made “the honest mistake … of losing the next-generation iPhone,” Gizmodo reported. The site said Powell is an “Apple Software Engineer working on the iPhone Baseband Software, the little program that enables the iPhone to make calls. A dream job for a talented engineer like Powell, an Apple fan who always wanted to meet Steve Jobs.”

(The phone was left at a bar in Redwood City, Calif. on March 18.

(“’I underestimated how good German beer is,’ he typed into the next-generation iPhone he was testing on the field, cleverly disguised as an iPhone 3GS,” Gizmodo reported.)

The stattement said Gizmodo paid Hogan $5,000 for the device, cracked it open and posted images of it on April 20 despite a phone call from Jobs the day before demanding website editors return the gadget. Gizmodo promised Hogan an additional $3,500 bonus if Apple formally unveiled the device by July, according to Broad.

Now, Chen is under investigation for theft, receiving stolen property and damaging property, according to the affidavit. The affidavit also suggests Hogan and a third roommate, Thomas Warner, also may face criminal charges, and alleges the two panicked and attempted to hide evidence when they caught wind of the criminal investigation.

Nobody, including Chen, has been charged with any crime,

"The events have taken on a life of their own," said Jeff Bornstein, Hogan’s attorney. "He thought it was dumb luck that he stumbled on to something valuable and he regrets not doing more to return it."

Bornstein said Hogan always intended to return the phone and didn’t believe he was breaking the law in dealing with Gizmodo.

Bornstein also denied the affidavit’s suggestion that Hogan was trying to get rid of evidence on April 21. That’s when, shortly before midnight, Hogan’s roommate Katherine Martinson called investigators and told them that Hogan and Warner were removing evidence from their apartment, the document said.

Investigators found Hogan at his father’s Redwood City house and he directed them to nearby Sequoia Christian Church, where they recovered Hogan’s computer and monitor.

Bornstein said that Hogan was in the process of moving out of the apartment and that Warner ended up with Hogan’s computer, panicked and dropped them off at the church.

The investigation has prompted debate over whether he should be shielded from prosecution by California’s so-called shield law, which protects journalists from having to turn over to police unpublished notes and the names of anonymous sources. But the shield law doesn’t immunize journalists from breaking the law.

The investigators themselves have come under fire as well for apparently launching the investigation at Apple’s behest. Detective Broad belongs to a special high technology task force called the Rapid Enforcement Allied Computer Team, which is comprised of investigators from several jurisdictions and investigates crimes against technology companies.

According to Broad, task force investigators met with two high-ranking Apple executives and outside lawyer George Riley on April 20, the day Gizmodo published the images. Riley told the task force that Gizmodo’s action were "immensely damaging to Apple," because consumers would hold off buying iPhones until the new version was released. Riley didn’t estimate a dollar figure, but said losses were "huge," according to the affidavit.

Apple is a member of the technology crime task force’s board, but the company said it didn’t use its influence to pressure law enforcement to investigate.

"We reported what we believe was a crime, and the D.A. of San Mateo county is taking it from there," said Apple spokeswoman Katie Cotton.

San Mateo County prosecutors had argued to keep the affidavit under seal to protect the identities of witnesses and the ongoing investigation. But The Associated Press and several other media companies convinced a San Mateo County superior court judge to make the document public, arguing disclosure was necessary to ensure that the raid of a journalist’s home was proper.

Local Tech Wire contributed to this report.

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