Apple’s newest iPhone, the 4S, has been on the market for a few weeks, but the saga surrounding the leak of a prototype of the previous-generation iPhone 4 is only now coming to a close.
Brian Hogan and Sage Wallower pleaded no contest to a misdemeanor charge of theft of lost property for selling a phone that an Apple tester accidentally left in a bar. The two men, both in their 20s and with no previous criminal records, each received a year of probation and 40 hours of community service. They were also ordered to pay Apple restitution of $250.
According to technology blog Gizmodo.com, it all started when Apple engineer Gray Powell headed out to celebrate his 27th birthday at a German beer garden. Powell accidentally left his phone at the bar. A forgotten phone isn’t usually a newsworthy event – unless, of course, the phone involved is a top-secret design produced by one of the world’s most notoriously close-mouthed technology companies, cleverly disguised as a run-of-the-mill older model. Which is exactly what Powell’s phone was.
Hogan, who was also at the beer garden that night, took the phone home, not realizing its true importance. He intended to return it the next day. Once he discovered what he had, he tried to contact Apple. His calls were ignored. Next, he and Wallower checked to see if perhaps a technology media outlet might take their story more seriously. Gizmodo, which is owned by Gawker Media LLC, listened. It offered $5,000 for the device. The site proceeded to post photos and conjectures about the new phone. Its software had been remotely disabled, but that didn’t stop the enterprising editors from examining the hardware. Gizmodo says that when it was asked to return the phone, it immediately arranged to do so.
Apple, however, may not have been satisfied with just getting its phone back. The company, which keeps most of its prototypes bolted to desks in its super-secured campus, was not happy about photos of its upcoming product being splayed all over the Internet. Much of that displeasure was likely directed at Jason Chen, a Gizmodo editor who reported on the dissected phone’s innards.
California’s Rapid Enforcement Allied Computer Team (REACT) – Silicon Valley’s high-tech police – raided Chen’s home on the authority of a search warrant issued by San Mateo County Superior Court Judge Clifford V. Cretan. Officers left with a pile of computers and hard drives; Chen was left with a broken door.
Like others at the time, I believed the search to be illegal. While others invoked California’s shield laws, which offer special protections for journalists, I saw no reason why anyone, journalist or not, should have been subject to a search when the evidence that any crime had actually been committed was minimal at best.
Eventually, the search warrant was withdrawn, which is a pretty good indication that it should not have been issued in the first place, and Chen’s property was returned. Conveniently for Apple, however, Chen didn’t get his computers and other research materials back until after the iPhone 4 was safely on the market.
Neither the men who sold the phone nor the journalist did anything obviously wrong in this case. Apple apologists (and government lawyers defending any lawsuits by Chen and Gizmodo, who were never charged) will claim the misdemeanor guilty pleas as evidence that justice, as well as beer, is served in Silicon Valley. If you believe this, I have an old IBM PCjr to sell you that will work just great as a server for your website.
Hogan and Wallower faced a pretty easy choice: They could take a slap on the wrist and get on with their lives, or they could run up a fortune in legal fees (which not every 20-something in Silicon Valley can afford) and risk felony convictions that would ruin their prospects for security clearances and job opportunities. Don’t confuse justice with expediency.
REACT needs reform, and the San Mateo County bench could do with a little review on the legal and ethical hazards of being a hometown judge.
There were concerns about REACT long before the iPhone incident. The task force’s website states that the organization “depends on our industry partners,” who provide know-how and other support. After the iPhone raid, Nick Muyo, the public information officer of the Santa Clara County district attorney's office, told the Los Angeles Times that technology companies, including Apple, “have open invitations” to attend meetings of REACT’s steering committee, and that many companies send representatives.
Letting law enforcement get too cozy with private industry can lead to an erosion of professional judgment. Someone needed to tell Apple that interference with the choreography of its product rollouts is not a crime, and that journalists’ homes and hard drives are not reference libraries.
Of course, there is another important lesson in this story: Don’t take corporate secrets into a bar. According to some reports about a missing iPhone 4S in August, Apple may not have learned that one.
This time, however, no search warrants were issued. Apple’s latest gizmo is nevertheless selling quite well.
Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book,
Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book
The High Achiever’s Guide To Wealth.
Posted by Larry M. Elkin, CPA, CFP®
Apple’s newest iPhone, the 4S, has been on the market for a few weeks, but the saga surrounding the leak of a prototype of the previous-generation iPhone 4 is only now coming to a close.
Brian Hogan and Sage Wallower pleaded no contest to a misdemeanor charge of theft of lost property for selling a phone that an Apple tester accidentally left in a bar. The two men, both in their 20s and with no previous criminal records, each received a year of probation and 40 hours of community service. They were also ordered to pay Apple restitution of $250.
According to technology blog Gizmodo.com, it all started when Apple engineer Gray Powell headed out to celebrate his 27th birthday at a German beer garden. Powell accidentally left his phone at the bar. A forgotten phone isn’t usually a newsworthy event – unless, of course, the phone involved is a top-secret design produced by one of the world’s most notoriously close-mouthed technology companies, cleverly disguised as a run-of-the-mill older model. Which is exactly what Powell’s phone was.
Hogan, who was also at the beer garden that night, took the phone home, not realizing its true importance. He intended to return it the next day. Once he discovered what he had, he tried to contact Apple. His calls were ignored. Next, he and Wallower checked to see if perhaps a technology media outlet might take their story more seriously. Gizmodo, which is owned by Gawker Media LLC, listened. It offered $5,000 for the device. The site proceeded to post photos and conjectures about the new phone. Its software had been remotely disabled, but that didn’t stop the enterprising editors from examining the hardware. Gizmodo says that when it was asked to return the phone, it immediately arranged to do so.
Apple, however, may not have been satisfied with just getting its phone back. The company, which keeps most of its prototypes bolted to desks in its super-secured campus, was not happy about photos of its upcoming product being splayed all over the Internet. Much of that displeasure was likely directed at Jason Chen, a Gizmodo editor who reported on the dissected phone’s innards.
California’s Rapid Enforcement Allied Computer Team (REACT) – Silicon Valley’s high-tech police – raided Chen’s home on the authority of a search warrant issued by San Mateo County Superior Court Judge Clifford V. Cretan. Officers left with a pile of computers and hard drives; Chen was left with a broken door.
Like others at the time, I believed the search to be illegal. While others invoked California’s shield laws, which offer special protections for journalists, I saw no reason why anyone, journalist or not, should have been subject to a search when the evidence that any crime had actually been committed was minimal at best.
Eventually, the search warrant was withdrawn, which is a pretty good indication that it should not have been issued in the first place, and Chen’s property was returned. Conveniently for Apple, however, Chen didn’t get his computers and other research materials back until after the iPhone 4 was safely on the market.
Neither the men who sold the phone nor the journalist did anything obviously wrong in this case. Apple apologists (and government lawyers defending any lawsuits by Chen and Gizmodo, who were never charged) will claim the misdemeanor guilty pleas as evidence that justice, as well as beer, is served in Silicon Valley. If you believe this, I have an old IBM PCjr to sell you that will work just great as a server for your website.
Hogan and Wallower faced a pretty easy choice: They could take a slap on the wrist and get on with their lives, or they could run up a fortune in legal fees (which not every 20-something in Silicon Valley can afford) and risk felony convictions that would ruin their prospects for security clearances and job opportunities. Don’t confuse justice with expediency.
REACT needs reform, and the San Mateo County bench could do with a little review on the legal and ethical hazards of being a hometown judge.
There were concerns about REACT long before the iPhone incident. The task force’s website states that the organization “depends on our industry partners,” who provide know-how and other support. After the iPhone raid, Nick Muyo, the public information officer of the Santa Clara County district attorney's office, told the Los Angeles Times that technology companies, including Apple, “have open invitations” to attend meetings of REACT’s steering committee, and that many companies send representatives.
Letting law enforcement get too cozy with private industry can lead to an erosion of professional judgment. Someone needed to tell Apple that interference with the choreography of its product rollouts is not a crime, and that journalists’ homes and hard drives are not reference libraries.
Of course, there is another important lesson in this story: Don’t take corporate secrets into a bar. According to some reports about a missing iPhone 4S in August, Apple may not have learned that one.
This time, however, no search warrants were issued. Apple’s latest gizmo is nevertheless selling quite well.
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