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In Second Trial, Ex-Goldman Sachs Programmer Convicted of Code Theft
Ars Technica reports that
A former Goldman Sachs programmer—featured in the book Flash Boys—was convicted on Friday for stealing high-speed trading code from the bank.
Sergey Aleynikov, 45, was also acquitted on one count of unlawful duplication, according to Reuters. The New York state jury could not come to a verdict on another count of unlawful use of secret scientific material.
Sergey Aleynikov was also acquitted of unlawful duplication. This was the second trial for Aleynikov in five years. He could face up to four years in prison.
Isn't there a law that forbids being trialed more than once for the same events ?
Yes, there is. In fact, his lawyer is going to appeal invoking double jeopardy.
That being said, it looks like that law may not favor him because:
Once again, however, the law is not as simple as it first appears because the statute has an important exception if the earlier case was “terminated by a court order expressly founded upon insufficiency of evidence to establish some element of such offense which is not an element of the other offense, defined by the laws of this state.” Roughly translated, that means Mr. Aleynikov probably can be prosecuted again because the federal case focused on tangible property, while the New York charges cover computer programs.
There is a good chance the latest charges will move forward, which makes Mr. Aleynikov’s demand that Goldman pay his legal fees all the more important because the earlier case essentially bankrupted him. According to a complaint filed in the United States District Court in New Jersey, he claims that the legal fees for the federal case were approximately $2.4 million, and the state case is likely to run up a similar bill.
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By the way, here is another weird tidbit about the case:
It seems a bit odd that someone accused of stealing from his employer can demand that it pay for his lawyer, but that is how the law operates for public companies like Goldman that agree to indemnify their employees for legal fees and make advance payments of those costs.
Goldman’s bylaws require it to indemnify an officer for all costs in any proceeding, including a criminal prosecution. As a vice president at Goldman, Mr. Aleynikov appears to come within the scope of the bylaws that entitle him to seek payment of his fees.
The bylaws commit Goldman to pay Mr. Aleynikov’s fees in advance of a resolution of the case as long as he agrees to repay the money if it is determined he is not entitled to it, which he has done.
Fabrice Tourre, who is on leave as a vice president, is having many of his legal expenses covered by Goldman as he faces a securities fraud lawsuit by the Securities and Exchange Commission. Goldman also paid a portion of the legal fees of its former director, Rajat Gupta, to defend him against insider trading charges, even though he was accused (and later convicted) of passing confidential information received from the firm.
Even better for Mr. Aleynikov is a provision of Delaware law, the state in which Goldman is incorporated, that requires a company to pay the legal fees of an officer who “has been successful on the merits or otherwise in defense of any action, suit or proceeding.”
When the appeals court reversed the conviction and ordered a dismissal of the charges, he was successful, even though the court also noted at one point that “Aleynikov stole purely intangible property embodied in a purely intangible format.”
That does not mean Goldman will pay the $2.4 million or advance additional money anytime soon, however. Companies loathe this type of claim because it makes them responsible for costs when they consider themselves the victim of a crime, and so there is an incentive to litigate the claim. Given Mr. Aleynikov’s dire financial condition, the firm could try to stall the case in the hope that he will settle for a smaller payment.
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I think this verdict sends a great message: do not steal from the leaches of society that have enough money to get other leaches elected.
From the comments on this article I get the feeling I'm the only one would read Flash boys. He was developing code, part of it proprietary and part of it open source, which he modified. His intent was to someday separate and release the modified open source code; he didn't have any plans to do anything with the proprietary code. He checked the code into a subversion repository based in Germany, apparently the first free code repository his search engine ranked.
So when the police got hold of this, they heard subversion" repository and concluded obviously this guy is a "subversive". Oh, it's hosted in Germany? Even worse.
When they investigated further, they made a big deal out of the fact that he deleted his bash history. What's he trying to hide? Sounds like a cover up.
That's the level of stupidity and ignorance and we've come to expect of police regarding technical matters. And for what it's worth, I use subversion, (or cvs, git, whatever the project uses) and my .bash_history links to /dev/null. I don't use the feature, so I don't waste the disk space. I guess that makes me a criminal.
What stealing, he took copies of Open Source he had incorporated into the app while he was employed at Goldman Sachs. By rights Goldman Sachs should be charged with possible GPL Violations.
"Serge quickly discovered, to his surprise, that Goldman had a one-way relationship with open source. They took huge amounts of free software off the Web, but they did not return it after he had modified it, even when his modifications were very slight and of general rather than financial use." ref
Lawyer for Ex-Goldman Programmer Criticizes Prosecutors and Firm