Former Goldman Sachs coder, freed on appeal, faces new charges

Sergey Aleynikov has been charged in a New York state court following his successful federal appeal in April

A former programmer for Goldman Sachs has been charged again with pilfering sensitive source code despite his successful appeal in April of his U.S. Federal Court trial outcome.

Sergey Aleynikov, a 42-year-old dual citizen of Russia and the U.S., was charged in New York County Court with two felonies, unlawful use of secret scientific material and duplication of computer-related material, according to the Manhattan District Attorney's office on Thursday.

Aleynikov was tried and convicted in U.S. Federal Court of stealing Goldman Sach's proprietary source code. It was alleged Aleynikov uploaded the code for the company's high-frequency trading (HFT) system to a computer server in Germany on his last work day at Goldman on June 5, 2009. The HFT system uses algorithms to make large trades within seconds depending on changing market conditions.

About a month later, Aleynikov met with Teza Technologies in Chicago, which had recently hired him, taking with him a flash drive and a laptop with portions of Goldman Sach's code. He was arrested the next day by the FBI after he flew back to New Jersey.

Aleynikov, who was the highest earner in his group of 25 programmers at Goldman Sachs making $400,000 a year, was sentenced to 97 months in prison.

But his conviction was overturned by the Second Circuit Court of Appeals on Feb. 17, and he was freed. His lawyers argued that he only downloaded open-source code.

The U.S. Constitution prohibits citizens from being tried twice for the same alleged crime. But this time around, Aleynikov has been charged under New York laws different than the federal acts he was previously accused of violating.

In his first trial, Aleynikov was found guilty of violating the National Stolen Property Act (NSPA) and the Economic Espionage Act (EEA). But the Appeals Court found that the acts did not cover Aleynikov's alleged actions.

The Appeals Court found that the NSPA covered criminal electronic transfers of money but not does not criminalize the theft of intangible things, such as source code. "We decline to stretch or update statutory words of plain and ordinary meaning in order to better accommodate the digital age," the judgment read.

The court also found Aleynikov did not violate the EEA because the source code was not related to a product produced for or placed in interstate or foreign commerce as defined by the act.

Send news tips and comments to jeremy_kirk@idg.com

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Jeremy Kirk

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