Go to HR or file a complaint

Sue. Sue them for all they're worth!!!!! (Obvious partial sarcasm)

Well that's something you should take to court. If it's in the contract then they will have to give you your job back and the phone.

That is definite grounds for wrongful dismissal.

Report this to a person in a high position

You should have a copy of the contract or it should be easy to dig up. Highlight the clause about the company phone and tell them that they owe you an explanation, the company phone and your job back. Don't go in w/o HR present, it will become "he said, she said" otherwise

I might as well also tell you that you're legally in the right and could do something about this.

sue the place

Steal everyone's phones and throw a Nokia at them. It'll teach them better

Sue for wrongful termination and unemployment payment.