|Nationality||Russia and United States|
Sergey Aleynikov is a former Goldman Sachs computer programmer. He emigrated from Russia to the US in 1990. Between 2009 and 2015 he was subjected to two consecutive prosecutions by Federal and NY State governments both of which resulted in the judgement of acquittal by the 2nd Circuit appellate and NY Supreme courts. His story inspired Michael Lewis's bestseller "Flash Boys".
Aleynikov was employed for two years, from May 2007 to June 2009, at Goldman at a salary of $400,000. He left Goldman to join Teza Technologies, a competing trading firm which offered to triple his pay.
In May 2010, Aleynikov founded Omnibius, LLC, a consulting services firm for financial clients.
Federal arrest, trial and acquittal
On July 3, 2009, he was arrested by FBI agents at Newark Liberty International Airport after Goldman raised the alarm over a suspected security breach. He was accused by the FBI of improperly copying computer source code that performs "sophisticated, high-speed and high-volume trades on various stock and commodity markets", as described by Goldman. The events leading to his arrest are covered by Michael Lewis in his 2014 book Flash Boys. According to Assistant United States Attorney Joseph Facciponti, "the bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways." Aleynikov acknowledged downloading some source code, but maintained that his intent was to collect open-source code. As this is a common practice among programmers, this is notoriously difficult to prove.
In June 2010, Aleynikov filed a motion in the Federal Court to dismiss the indictment for failure to state a claim. He argued that the acts he was accused of didn't constitute a crime. The Federal Judge Denise Cote dismissed one charge against him but denied the rest of the motion.
In December 2010 Aleynikov had a jury trial in the United States District Court for the Southern District of New York, where the courtroom was sealed to public access several times. On December 10, he was convicted of the two counts of theft of trade secrets and transportation of stolen property. Later he was sentenced to 97 months (8 years) in prison, three years of supervised release following his prison sentence, and a $12,500 fine, despite the recommendation of the Federal Probation Service of suggesting a 24 month (2 years) sentence.
Three weeks before sentencing, Aleynikov was incarcerated on request of the government, as he was judged to be more of a flight risk after separating from his wife.
In March 2011, Aleynikov appealed the conviction, asking the Second Circuit to review the District Court's decision denying his original motion to dismiss the indictment for failure to state a claim.
On February 16, 2012, the United States Court of Appeals for the Second Circuit heard oral argument on his appeal and, later that same day, unanimously ordered his conviction reversed and a judgment of acquittal entered, with opinion to follow. Aleynikov was released from custody the next day.
On April 11, 2012, Dennis Jacobs, Chief Judge of the United States Court of Appeals, published a unanimous decision in a written opinion stating:
On appeal, Aleynikov argues, inter alia, that his conduct did not constitute an offense under either statute. He argues that:  the source code was not a "stolen" "good" within the meaning of the NSPA, and  the source code was not “related to or included in a product that is produced for or placed in interstate or foreign commerce” within the meaning of the EEA. We agree, and reverse the judgment of the district court.
The government did not seek reconsideration of the Second Circuit's ruling, thus ending federal action against Aleynikov.
Later, on December 18, 2012, the law was changed by Congress, in order to punish acts like the ones Aleynikov committed in future rulings, in a law referred to as the "Theft of trade secrets clarification act of 2012".
New charges by the state of New York, trial, and acquittal
On August 9, 2012, Aleynikov was re-arrested and charged by Manhattan District Attorney Cyrus Vance, Jr. on behalf of New York state, with the offenses of "unlawful use of secret scientific material" and "unlawful duplication of computer related material" based on the same conduct. The state prosecution was initiated based on a signed complaint by the same federal agent, McSwain, who led the investigation of the failed federal prosecution. Aleynikov's lawyer, Kevin Marino, accused Goldman Sachs of being behind the government's aggressive prosecution of Aleynikov, and he sharply criticized the Manhattan District Attorney's office for charging Aleynikov after his federal conviction had been overturned and he had already served a year in prison.
On September 27, 2012, Aleynikov pled not guilty to both state charges and rejected the prosecutors' plea offer of accepting a single count offense and serving no jail time. On April 5, 2013, Aleynikov lost his motion to dismiss based on double jeopardy. In rendering the decision, New York State Supreme Court Justice Ronald Zweibel stated that Aleynikov's acquittal in federal court only precluded the federal government from retrying Aleynikov. The state of New York, as a separate sovereign, could continue pursuing charges against Aleynikov.
On June 20, 2014, upon reviewing the evidence, Justice Ronald Zweibel published a 71-page opinion in which the court ruled that F.B.I. “did not have probable cause to arrest defendant, let alone search him or his home.” The arrest was “illegal,” and Mr. Aleynikov’s “Fourth Amendment rights were violated as a result of a mistake of law.” Besides finding that he was arrested illegally without probable cause, the court blocked the majority of evidence passed by the F.B.I. to prosecutors at the NY State DA's office, as that property was supposed to be returned to Mr. Aleynikov upon his acquittal.
The state jury returned a split verdict on May 1, 2015. He was acquitted on one count of "Unlawful duplication of computer related material", found guilty on one count of "Unlawful use of secret scientific material" and jury couldn't reach a verdict on another identical count of "Unlawful use of secret scientific material". Justice Conviser ruled on the motion to dismiss the verdict, and on July 6, 2015 all charges were dismissed. In his opinion he wrote:
The Court holds that, viewing the evidence in a light most favorable to the People, the prosecution did not prove the Defendant made a “tangible reproduction or representation” of secret scientific material as required by the statute. The Court also holds, again under the same evidentiary standard, that the People did not demonstrate Aleynikov had the “intent to appropriate . . . the use of secret scientific material” as required by the law.
Defendants cannot be convicted of crimes because we believe as a matter of policy that their conduct warrants prosecution.
- "Serge Aleynikov". LinkedIn. Retrieved August 10, 2012.
- "Patent application title: Strategic Telecom Optimized Routing Machine"
- ØMQ: Mission Accomplished
- Search Results for "Sergey Aleynikov"
- Peter Lattman (December 10, 2012). "Former Goldman Programmer Found Guilty of Code Theft". The New York Times. Retrieved August 10, 2012.
- Lewis, Michael (2014). Flash Boys: Cracking the Money Code. London, UK: Allen Lane. ISBN 9780241003633.
- David Glovin and Christine Harper (July 6, 2009). "Goldman Trading-Code Investment Put at Risk by Theft (Update3)". Bloomberg. Retrieved August 10, 2012.
- Bill Singer (March 22, 2011). "Former Goldman Sachs Programmer Sentenced in Federal Criminal Case". Forbes. Retrieved August 10, 2012.
- Peter Lattman (March 2, 2011). "Judge Unexpectedly Imprisons Ex-Goldman Programmer". The New York Times. Retrieved August 10, 2012.
- "United States v. Aleynikov" (PDF). United States Court of Appeals for the Second Circuit. April 11, 2012. Retrieved August 10, 2012.
- Kim Zetter (April 11, 2012). "Code Not Physical Property, Court Rules in Goldman Sachs Espionage Case". Wired. Retrieved August 10, 2012.
- Judge Orders Goldman to Pay Ex-Programmer's Legal Bills - NYTimes.com
- Goldman vs. the Programmer: Bad News All Around, BusinessWeek, February 22, 2012
- "Government not filing a petition for rehearing". U.S. Department of Justice. May 29, 2012.
- THEFT OF TRADE SECRETS CLARIFICATION ACT OF 2012 -- (House of Representatives - December 18, 2012)
- "Former Goldman Sachs Programmer Charged With Illegally Taking Proprietary Computer Code" (press release). August 9, 2012.
- "Sergey Aleynikov, Goldman Programmer Accused Of Code Theft, Faces New Charges". Reuters. August 9, 2012. Retrieved August 10, 2012.
- Pater Lattman (September 27, 2012). "Lawyer for Ex-Goldman Programmer Criticizes Prosecutors and Firm". New York Times.
- "Ex-Goldman programmer rejects plea deal with NY—lawyer". Reuters. September 27, 2012.
- "Former Goldman programmer fails to win dismissal of code theft case". Reuters. April 30, 2013.
- "Judge throws out evidence in Sergey Aleynikov's code theft case". The New York Times. June 20, 2014.
- Protess, Ben; Goldstein, Matthew (2015-05-01). "Ex-Goldman Sachs Programmer Found Guilty in Split Verdict". NYTimes.com. Retrieved 2015-05-01.
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- ["http://ypdcrime.com/penal.law/article165.htm#p165.07" "Unlawful use of secret scientific material"]. "ypdcrime.com".
- Goldman appeal Reuters, July 6, 2015
- ["http://www.nytimes.com/interactive/2015/07/06/business/dealbook/document-ruling-on-ex-goldman-programmer.html" "Justice Convisor's opinion"]. NYTimes.com.
- United States of America v. Sergey Aleynikov Complaint
- Reuters Special Coverage on Sergey Aleynikov
- The Guardian
- Bloomberg News
- What's The Deal With That Goldman Sachs Programmer? by NPR Planet Money.
- Did Goldman Sachs Overstep in Criminally Charging Its Ex-Programmer? by Michael Lewis, VanityFair
Conviction Overturned & Complete Acquittal