Freed Ex-Goldman Sachs programmer charged again

Posted at: 08/09/2012 7:06 PM
By JENNIFER PELTZ

(AP) NEW YORK - When a former Goldman Sachs computer programmer was freed from prison after getting his software-theft conviction overturned, he declared that "justice occasionally works."

Six months later, Sergey Aleynikov faced new charges Thursday over the same allegations: that he copied valuable, secret computer code from the financial powerhouse as he was leaving for a new job.

This time, he’s being charged under state laws, instead of the federal laws involved in his now-reversed conviction.

The Manhattan district attorney’s office, which is bringing the new case, called it an appropriate use of state laws to pursue an employee who exploited his access to sensitive information. Aleynikov’s lawyer called the new prosecution a vindictive, legally questionable effort to take a second swipe at a man who already served time for a crime judges later said he didn’t commit.

"There isn’t any doubt that Mr. Aleynikov is going to fight these charges," defense lawyer Kevin Marino said. "He’s already done this once, and he’s going to do it again."

Freed on $35,000 bond, a worn-but-smiling Aleynikov declined to comment as he left court after being arraigned on charges including illegally using scientific material.

Aleynikov was freed from federal prison in February after an appeals court said a law used to convict him was misinterpreted. He had served about a year of a more than eight-year sentence.

The Russian-born Aleynikov, 42, worked for Goldman for two years, becoming a $400,000-a-year vice president.

Like the federal case, the new charges accuse him of copying a chunk of confidential computer code during his last day of work at Goldman in June 2009, downloading the code to his home computer, and planning to bring it to his new employer. He was leaving for a Chicago financial startup that was poised to pay him $1 million or more in his first year.

The code was on the laptop Aleynikov was carrying when arrested after a trip to his new office in July 2009, prosecutors said.

The software helped run what’s known as high-frequency trading, a burgeoning, lucrative practice. Its sophisticated computer programs use mathematical formulas to evaluate moment-to-moment developments in the market and rapidly execute scores of trades.

"This code is so highly confidential that it is known in the industry as the firm’s `secret sauce,’" Manhattan District Attorney Cyrus R. Vance Jr. said in a statement. Federal prosecutors have said Goldman Sachs makes millions of dollars a year in profits from high-speed trading and gets a competitive advantage from its computer programs.

In the federal case, Aleynikov maintained he just tried to duplicate parts of Goldman’s software that came from publicly available code. Marino acknowledged that Aleynikov violated the company’s confidentiality agreements but said that was a matter for a lawsuit, not a criminal case.

A federal jury convicted him in December 2010 of charges including stealing trade secrets. Then an appeals court threw out the guilty verdict in February and acquitted him, saying his conduct wasn’t a crime under the laws in question.

Marino said he’ll argue that the new case violates constitutional protections against double jeopardy, or being tried twice for the same crime. The DA’s office said it doesn’t believe double jeopardy applies because of differences between federal and state laws and jurisdiction.

Since his release, Aleynikov has been living in West Orange, N.J., and working intermittently as a computer consultant, Marino said. Aleynikov’s marriage crumbled after his 2009 arrest, and he now sees his three daughters every other week, the attorney said.

Aleynikov plans to sue federal prosecutors and Goldman Sachs, Marino said.

Goldman Sachs Group Inc. and the U.S. attorney’s office for Manhattan declined to comment.

If convicted of the new charges, Aleynikov could face up to four years in prison.

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(Copyright 2012 by The Associated Press. All Rights Reserved.)

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