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Investigators in lost iPhone 4 prototype case expected to report findings soon

A government probe into the high-profile case of an iPhone 4 prototype that was purchased by a gadget blog after it went missing from Apple last spring is on the verge of bearing its fruits, according to a published report.

Seeking an update on the case, CNet on Thursday contacted Stephen Wagstaffe, district attorney for the county of San Mateo, Calif., who told the publication that he believes the investigation could conclude as early as next month, as investigators are close to finishing their interviews before presenting him with their findings.

The investigation dates back nearly a year to last April when Robert Gray Powell, a 27-year old Apple employee working on the then unreleased iPhone 4's baseband, accidentally left an unmarked prototype of the handset at a German beer garden in Redwood City, Calif. while he was out celebrating his birthday.

Brian Hogan, a 22-year-old student, subsequently found the prototype and sold it to Gawker Media's Gizmodo for $5,000 with the help of 27-year old University of California at Berkeley student Sage Robert Wallower, who reportedly acted as a fence.

Within days, Gizmodo had published photographs and videos of the device to its website, along with a teardown of the hardware, pieces of which were subsequently picked up by the national media and broadcast on network television news stations.

Almost immediately, Apple began pressuring local authorities to open an investigation into the matter, alleging that the prototype was so valuable — since the product had not yet been introduced to the public — that no price tag could be placed on it. At the same time, Apple chief executive Steve Jobs personally contacted Gizmodo editor Brian Lam via e-mail, requesting he return the device.

Thus far, no charges have been filed in the case, which is officially "a felony theft investigation." At issue is whether an actual crime took place and who should be held accountable should investigators determine that laws were broken.

For his part, Jobs has raised the possibility that the device may have actually been stolen from Powell at the bar, rather than just discovered after having been left behind.

"There's an ongoing investigation," Jobs told the Wall Street Journal's Walt Mossberg during last June's All Things D conference. "I can tell you what I do know, though. To make a product you need to test it. You have to carry them outside. One of our employees was carrying one. There's a debate about whether he left it in a bar, or it was stolen out of his bag."

"The person who found it tried to sell it, they called Engadget, they called Gizmodo," he continued. "The person who took the phone plugged it into his roommates computer. [...] And this guy was trying to destroy evidence, and his roommate called the police."

"So this is a story that's amazing: it's got theft, it's got buying stolen property, it's got extortion, I'm sure there's some sex in there," Jobs quipped. "The whole thing is very colorful. The DA is looking into it, and to my knowledge they have someone making sure they only see stuff that relates to this case. I don't know how it will end up."

For their part, prosectors have maintained that media organizations like Gizmodo can not expect to be immune from criminal laws if they commit crimes. As such, they obtained a warrant to search the home of Jason Chen, one of the publication's editors, and proceeded to break down his door and seized four computers, two servers, and an assortment of other electronics in late April of 2010.

But as CNet points out, allegations raised by the Reporters Committee for Freedom of the Press and other advocacy groups may serve to complicate matters with their claims 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," the report adds, which is a term that a state court has applied to an Apple online publication before: AppleInsider.