A woman allegedly tried to blackmail the couple for $1000 for the phone, as they said goodbye to their infant daughter.
According to father Jay Windross, the person who contacted them allegedly demanded the money be "deposited into their account for the return of the phone".
Police have charged Siti Nurhidayah, 24, with one count of blackmail for allegedly demanding cash from the desperate parents.
The Springvale woman faced Ringwood Magistrates' Court today and was denied bail.
She had been living in Australia for four months, working as an Uber Eats delivery cyclist. She has two young children in Malaysia.
Mr Windross said the phone had still not been found.
Mrs Windross said on social media that a number of people had falsely reported finding the phone.
"I have not had my phone handed back and am still looking for it and the memories it holds," she wrote online last week.
"We have also tried multiple ways of back ups to retrieve the photos, none have worked."
The couple explained that their baby, who had spent about 200 of her 330 days alive in hospital, had most of her life chronicled in photos and videos on that phone.
"All the photos of (Amiyah) during the day, doing things, it's all on Dee's phone," Mr Windross said last week.
"We can get another phone, but it is not about that. It's all about the photos.
"We beg you as grieving parents not to wipe the phone."
Jay said doctors noticed there was something not quite right with their baby girl "within hours of her being born".
"She spent her first week of life in special care," he said.
"She's about 330 days old, and she has spent nearly 200 of those in hospital".
