Brian Hogan, who allegedly discovered the prototype laying on a Redwood City barstool in March of last year, was charged with "misappropriation of lost property," while Sage Wallower was also charged with the same count as well as possession of stolen property.
Gawker Media allegedly paid the duo $5000 to obtain the device for an exclusive story on the new phone for its Gizmodo site just prior to its unveiling by Apple. The company publicly admitted that it had paid to obtain the prototype from a man who claimed to have found it.
In an affidavit related to the investigation, it was revealed that "Steve Jobs (Apple CEO) contacted the editor of Gizmodo.com, Brian Lam," and that "Jobs requested that Lam return the phone to Apple. Lam responded via the e-mail address  that he would return the iPhone on the condition that Apple provided him with a letter stating the iPhone belonged to Apple."
The document further noted that "upon receiving the stolen property, [Gizmodo editor Jason] Chen disassembled the iPhone, thereby causing it to be damaged. Chen created copies of the iPhone prototype in the form of digital images and video, which were subsequently published on the Internet based magazine Gizmodo.com"
Based on the affidavit, a warrant was issued that resulted in the seizure of four computers, two servers, and iPad, iPhone, Airport Extreme base station, and external hard drives, all under probably cause that Chen's computers had been "used as the means of committing a felony." It has not been reported whether the equipment has been returned or not.
Despite Gizmodo's role in the misappropriation of Apple's lost property and its apparent possession of stolen property, which it used to taunt Apple's legal representatives for what appears to have been a period of weeks after obtaining it, Karen Guidotti, the chief deputy district attorney of San Mateo, issued a press release stating that, "after a consideration of all of the evidence, it was determined that no charges would be filed against employees of Gizmodo."
Gizmodo reported today that the district attorney "has decided, upon review of all of the evidence, that no crime was committed by the Gizmodo team in relation to its reporting on the iPhone 4 prototype last year," but no public statement made by the DA's office indicated that it believed that no crime had been committed; the press release only stated that no charges would be filed.
iPhone Press Statement 8-10-11