[BreachExchange] Court Rules Thumb Drive A Physical Object, Sergey Aleynikov A Thief Again

[Audrey McNeil]

http://dealbreaker.com/2017/01/goldman-sachs-sergey-aleynikov-reconvicted/


If you thought that the matter of what constitutes illegally stealing
high-frequency trading code from Goldman Sachs could be resolved in a mere
six years, think again: Sergey Aleynikov, the former programmer convicted
and then unconvicted and then convicted and unconvicted again for the crime
of taking home a souvenir of his work for Goldman that he may or may not
have planned to use at his new job is guilty of that crime once again.

Let’s review: Back in 2009, a Goldman programmer named Sergey Aleynikov
decided to accept an offer tripling his salary from Teza Technologies, a
plucky new HFT shop. And on his way out, he decided to download a few
million lines of code for the HFT software he’d been working on. This
caught Goldman’s eye, and it had the FBI arrest Aleynikov. It also caught
Ken Griffin’s eye, leading him to sue Teza. But that’s another story.

In December 2010, he was convicted in federal court of theft of trade
secrets and transporting stolen property, and sentenced to eight years in
prison. A year later though, he got out, after a federal appeals court said
that Aleynikov was right all along when he said violating Goldman Sachs
policy is not the same as violating the law. Because the law at the time
said you had to take something physical, and since Aleynikov put the code
on his own flash drive, rather than printing it out on Goldman paper or
burning it onto a Goldman DVD from the supply closet, no crime.

That’s not the most stirring grounds for getting out of jail free, and it
left Manhattan D.A. Cy Vance wondering, maybe New York State law is
somewhat better written, and then charging Aleynikov with the somewhat more
well-defined crimes of “unlawful use of secret scientific material” and
“unlawful duplication of computer related material.” And it worked (again),
until it didn’t work (again) and for largely the same reasons: The judge in
the case was just as unwilling to countenance throwing a man behind bars if
he hadn’t taken something you can touch as was the Second Circuit. And so a
year-and-a-half ago, Sergey was dancing again, free to pursue his
well-earned vendettas against Goldman and the FBI agents who shredded his
constitutional rights at the very beginning of this whole odyssey, which
has now gone on for so long that Goldman is now literally giving awaythe
kind of thing Aleynikov took.

Now, we at Dealbreaker have been pretty sympathetic towards Aleynikov,
since the guy’s had his whole life ruined for maybe thinking about doing a
bad thing to Goldman Sachs but not actually doing it. Still, we have to
admit that the D.A.’s got a point when he complains that limiting the law
to theft of intellectual property in paper form doesn’t make a ton of
sense, and that the Talmudic handwringing over what constitutes a
“tangible” object seems to be ignoring that a thumb drive is in fact
composed of atoms and can be held and touched and caressed and transported
over state lines, etc. And a New York appellate court agrees.

“It would be incongruous to allow a defendant to escape criminal liability
merely because he made a digital copy of the misappropriated source code
instead of printing it onto a piece of paper,” the panel said….

The trial judge’s finding “makes little sense,” given that a compact disc
or a thumb drive are both “unquestionably tangible,” the appeals panel said.

“The trial court’s position also ignores the trial evidence that a hard
drive can be taken out of the server,” the panel said.

On the bright side for Sergey—and there is one!—for all the new legal bills
this latest development will generate and that Goldman won’t pay, at least
he (probably) won’t be going to jail again.

Aleynikov, a native of Russia, must now return to court to be sentenced,
unless his lawyers can win one final appeal before the state’s highest
court in Albany…. He faces as long as four years in prison, although
prosecutors have said they aren’t seeking to incarcerate him further.
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