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McDormand, who won the Best Actress award for her role in "Three Billboards Outside Ebbing, Missouri," was photographed getting her Oscar trophy personalized at the engraving station before the theft occurred.
The theft was discovered when the Oscar came up missing from McDormand's table at the Governors Ball.
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According to police, 47-year-old Terry Bryant, of Los Angeles, was arrested on suspicion of grand theft around 11:50 p.m. on Sunday. Bryant's bail was set at $20,000, police said.
The Los Angeles Police Department is investigating why the suspect was at the event in the first place, but confirmed that he did have a ticket to the Governors Ball.
Police said Bryant was exiting the Governors Ball when he was photographed holding an Oscar statuette. "The photographer did not recognize Bryant as a recipient from the awards show and believed he was in possession of a trophy which did not belong to him," the LAPD said in a statement on Twitter.
Police said the photographer followed Bryant and took the statue from him before Bryant was detained by security at the event.
Bryant, meanwhile, posted a video to social media holding the Oscar. "This is mine," he said. "We got it tonight, baby."
Thanks to a photographer who not only has a sharp eye for pics, but also for thievery, Terry Bryant was arrested for stealing an #Oscars trophy during last night's Governor's Ball pic.twitter.com/VhRnf9xbVl— LAPD HQ (@LAPDHQ) March 5, 2018
The Academy of Motion Picture Arts and Sciences issued a statement in the wake of the incident, saying:
"Best Actress winner Frances McDormand and her Oscar were happily reunited after a brief separation at last night's Governors Ball. The alleged thief was quickly apprehended by a photographer and members of our fast-acting Academy and security teams. The "Three Billboards Outside Ebbing, Missouri" star resumed her celebrations."