Programmer's Case Is Matter of (Legal) CodeJames Cohen in Reuters, September 27, 2012
Sergey Aleynikov thought his legal nightmare was over.
His federal-court conviction for stealing computer code from former employer Goldman Sachs Group Inc. was overturned by an appeals court in February, allowing the 42-year-old Russian immigrant to walk out of prison after a year behind bars. His $1 million-a-year dream job was gone, he was penniless and his marriage had crumbled, but he was a free man.
Then it started all over again.
CTRL-ALT-INDICT: Sergey Aleynikov and his lawyer, Kevin Marino, leaving court in Manhattan in August.
In August, the Manhattan District Attorney's office decided to try the case under state law. Mr. Aleynikov pleaded not guilty in court Thursday morning after he was indicted on state charges. His attorney, Kevin Marino, lashed out at prosecutors, the justice system and Goldman Sachs in an emotional statement in which he called his client's circumstances a travesty of justice. "It's hard to imagine the journey he has had through this system," Mr. Marino told the court.
Mr. Marino accused law-enforcement officials of kowtowing to Goldman Sachs in pursuing charges against his client for a second time. His client fled Russia for freedom and justice and instead "got Franz Kafka and Goldman Sachs," Mr. Marino told the court, referring to "The Trial," a novel about an unassuming office worker who is arrested on mysterious charges.
A spokesman for Goldman Sachs declined to comment.
David Szuchman, chief of the District Attorney's Cybercrime and Identity Theft Bureau, said the office's decision to bring a new case against Mr. Aleynikov came from the appeals-court decision and not Goldman Sachs.
"That court said very clearly that the defendant's conduct was not enough to prove a federal crime, but suggested that it could violate state law," Mr. Szuchman said in an email Thursday. "On our own initiative, we contacted federal prosecutors and asked for their cooperation," he said. "Any suggestion that we filed these charges for any other reason is false."
Crime and Punishment: Sergey Aleynikov's court saga
June 2009: Aleynikov quits Goldman Sachs after being hired by Teza Technologies. Prosecutors alleged he stole Goldman's computer code on his last day at work.
July 2009: Aleynikov is arrested after returning to Newark Liberty International Airport. Teza suspended Aleynikov after his arrest and eventually terminated him.
February 2010: He is indicted and pleads not guilty to charges that he stole Goldman's computer codes.
December 2010: Aleynikov is convicted by a jury and later sentenced to eight years in federal prison.
February 2012: An appeals court overturns his conviction and Aleynikov is freed from prison in Fort Dix, N.J.
August 2012: Aleynikov is arrested in New Jersey and later charged with a nearly identical crime by the Manhattan district attorney.
Source: WSJ research
One thing isn't in dispute: Mr. Aleynikov downloaded some code from Goldman's computers. However, Mr. Marino argued at the trial that Mr. Aleynikov intended to use only the portions of the downloaded code that were "open source," or freely available. High-speed-trading and other financial firms aggressively protect their code, considering it a trade secret and a competitive advantage. Goldman required that its employees sign a confidentiality agreement as part of their employment and that any software created by them in their jobs was the property of the investment bank.
State prosecutors offered a plea deal in which Mr. Aleynikov would have served no prison time beyond what he had already served, according to Mr. Marino, which he described after the hearing as "the nonstarter of the century." That offer has been rescinded, prosecutors said.
Mr. Aleynikov's troubles began in 2009, when after working for two years as a computer programmer at the New York investment bank, he accepted a $1 million-a year job programming computers to execute superfast trades for a Chicago start-up.
His world came crashing down on a July day at Newark Liberty International Airport in New Jersey when he was arrested and charged with illegally downloading 32 megabytes of computer code from Goldman's computers and sending it to a computer server in Germany. Federal prosecutors alleged that he downloaded the code to help him build a similar high-speed trading platform at Teza Technologies LLC, a start-up founded by Mikhail "Misha" Malyshev, a former executive at hedge-fund Citadel LLC.
Teza suspended Mr. Aleynikov after he was arrested and eventually terminated him.
He was convicted in December 2010. After a year in prison, an appeals court overturned his conviction, saying that taking the code may have violated his obligations to the company but wasn't a crime under the laws for which he was convicted.
It is rare, but not unprecedented, for prosecutors to charge a defendant who already has been convicted and served prison time, or a federal appeals court has overturned the conviction. The law permits it, though. A legal precedent known as "Dual Sovereignty" allows state and federal entities to prosecute what are essentially the same crimes. New York state also has built-in exceptions that allow prosecutors to charge people with the same crime, even if a case has already been adjudicated in federal court.
Mr. Marino, however, said he will prove in a motion that the case against Mr. Aleynikov doesn't fit any of the exceptions outlined in New York state law, and maintains that his client is innocent of the crime he is accused of committing. "If New York's double-jeopardy statute means anything, it means that an individual cannot be retried after he has been acquitted of the conduct at issue," Mr. Marino said Thursday.
Mr. Marino's courtroom statement ended with Judge Ronald Zweibel asking him to put his argument into writing in the form of a motion to dismiss the case. Mr. Marino said he would submit a motion next month, and a court hearing on the matter is set in November.
James Cohen, a law professor at Fordham University, said chances are "very close to zero," that the case will be thrown out on double-jeopardy grounds.
Mr. Marino said his client was arrested last month on a "fugitive warrant" after he attempted to retrieve his passport from federal authorities, who confiscated it when he was originally charged in federal court. He was attempting to visit his mother, who is undergoing cancer treatment in Russia, Mr. Marino said.
—Chad Bray contributed to this article.