Ex-Goldman Sachs Programmer Conviction Reversed
By Patricia Hurtado – Feb 17, 2012 8:36 AM ET
Sergey Aleynikov, the former Goldman Sachs Group Inc. (GS)computer programmer found guilty of espionage for stealing the firm’s code for high-frequency trading, had his conviction overturned by a federal appeals court in New York.
In a one-page order yesterday, the U.S. Circuit Court of Appeals in Manhattan told the lower court to enter a judgment of acquittal, saying an opinion will follow later.
Aleynikov was convicted by a Manhattan federal jury in December 2010 of violating the Economic Espionage Act and the Interstate Transportation of Stolen Property Act. He was sentenced to more than eight years in prison last March.
On his last day of work at New York-based Goldman Sachs in June 2009, Aleynikov uploaded hundreds of thousands of lines of source code from the firm’s high-frequency trading system, prosecutors said.
He circumvented Goldman Sachs’s security, sent the code to a server in Germany, compressed and encrypted it, and took it with him to a meeting with new employers in Chicago, the U.S. said. Prosecutors argued Aleynikov wanted it as a “cheat sheet” to start a trading system at his new job.
Appeals Panel Criticism
During oral arguments yesterday, the three-judge appeals panel criticized the government’s application of the Economic Espionage Act to Aleynikov’s actions, asking the prosecutor how the crime occurred and how it affected commerce.
The appeals court judges — Dennis Jacobs, 67, Guido Calabresi, 79, and Rosemary Pooler, 73 — also asked if the taking of Goldman Sachs’s trading code was comparable to taking copyrighted material or bringing an employee manual to a new job.
Aleynikov’s lawyer, Kevin Marino, argued that the trial judge had “bent over backward” to let the government apply the espionage statute and said the case belonged in state court.
“We are deeply gratified that the court of appeals has roundly rejected the government’s attempt to expand the scope of these federal statutes,” Marino said today in a phone interview. “Mr. Aleynikov has spent a year in prison on an invalid conviction.”
Aleynikov, 42, is being held at the Federal Correctional Institution in Fort Dix, New Jersey, according to the U.S. Bureau of Prisons website. Marino, of Chatham, New Jersey-based Marino, Tortorella & Boyle PC, said he would do everything he could to get his client out of prison today.
The case is U.S. v. Aleynikov, 1:10-cr-00096, U.S. District Court, Southern District of New York (Manhattan).
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