Mens rea, which may at some point be translated into a jury getting to decide whether beyond all reasonable doubt he did not make a reasonable effort to return the 'phone.
And he called a representative of the owner, who refused it, soooooo...
(Apple users love a soap opera!)
But he NEVER contacted the bar in which he found it. Most honest people, including me, would have turned over a phone found at a bar to the bartender. At the time he didn't even know it wasn't a 3G or 3GS because it was in disguise. (at least thats what he claimed) I think he realized pretty quick what he had and never had any intention to return it to its owner.