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The policy only states that they can take the phone. The first time it can be kept for one week. The phone is not suppose to be used during the school day. In this case, use was permitted but a teacher (this is a prep school) thought they saw something on the phone and took it. The phone was brought to the Dean's office and the Dean both went through it (and we later found out, actually sent 5 texts from the phone to another student). We found out from our cell records.
Actually, I'm more concerned about the second part of the question, which is "can they send text messages from the phone without my daughter's knowledge or permission"? She was not even at the school when this was done.