Ex-Goldman programmer’s code theft conviction revived by NY court

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By Jonathan Stempel | NEW YORK

NEW YORK A New York state appeals court on
Tuesday reinstated the criminal conviction of former Goldman
Sachs Group Inc programmer Sergey Aleynikov for stealing
computer code from the bank as he prepared to jump to a
high-speed trading start-up.

The 5-0 decision by the Appellate Division in Manhattan
reinstated a May 2015 jury verdict that had later been
overturned by the trial judge.

It means Aleynikov, 46, who had won the overturning of two
criminal convictions in a 7-1/2-year legal odyssey, will be
resentenced unless he wins permission to ask the state’s Court
of Appeals in Albany for another reversal.

Kevin Marino, Aleynikov’s lawyer, said he is “seeking
immediate leave to appeal” the decision, “which contravenes
settled law as to the meaning of the statutory requirements of a ‘tangible’ reproduction and the ‘intent to appropriate.'”

Aleynikov is a dual U.S. and Russian citizen whose tale
helped inspire Michael Lewis’ bestselling book “Flash Boys” on
the rise of high-frequency trading in the U.S. equity market.

Prosecutors accused the former Goldman vice president of
illegally copying Goldman trading code in 2009 as he prepared to
join Teza Technologies LLC in Chicago.

Aleynikov said he intended the code only for his own use.

Arrested in July 2009 on federal charges, Aleynikov was
convicted and spent 11 months in prison before a U.S. appeals
court voided that conviction in February 2012, saying his
activity was not a crime under federal corporate espionage laws.

Vance charged Aleynikov under state law six months later.

In July 2015, Aleynikov’s trial judge said the second
conviction, for unlawful use of secret scientific material, must
be voided because prosecutors did not prove that Aleynikov
committed “this particular obscure crime.”

But the appellate division said the judge appeared to have
wrongly believed that stolen source code needed to be printed on
paper for Aleynikov to be guilty.

“The fact that defendant made the reproduction onto a
physical hard drive, rather than onto a piece of paper, is of no
consequence,” Justice Rosalyn Richter wrote.

Aleynikov faces up to four years in prison.

In a statement, Vance said theft of intellectual property “is indeed a crime” in New York, “regardless of the physical
means used to spirit the data away from its source.

“No company wants to do business in a market where someone
can steal its work product without consequences,” he added.

Aleynikov has incurred more than $8 million in bills
fighting the criminal charges, and is trying to force Goldman to
cover some costs.

The case is New York v Aleynikov, New York State Supreme
Court, Appellate Division, First Department, No. 4447/12.

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