Second Trial of Code Ace Cleared

James Cohen in The Wall Street Journal, April 30, 2013

Media Source

For Russian computer programmer Sergey Aleynikov, the wheels of justice keep on turning. And turning.

A state judge has ruled that the former Goldman Sachs Group Inc. computer programmer can be prosecuted a second time for the alleged theft of the investment bank's secret computer code.

The decision, made public Tuesday, comes a little over a year after Mr. Aleynikov was released from prison, following the reversal in February last year of his 2010 conviction in federal court on the same allegations. The feeling of freedom didn't last long for the 43-year-old Russian math whiz, who was indicted by the state on similar charges by the Manhattan district attorney within six months of his release.

"Successive State and federal prosecutions for the same conduct are not prohibited by the United States Constitution's Double Jeopardy Clause," Judge Ronald Zweibel wrote in his 40-page ruling.

Kevin Marino, Mr. Aleynikov's attorney, said his client planned to prevail at trial. "We remain confident that Mr. Aleynikov will be exonerated," he said in an interview Tuesday. In past court papers, Mr. Marino had argued the second prosecution of his client was "ludicrous." He wrote: "In the rare instance where a vindictive prosecution is found, it must be dismissed as such."

But the judge rejected claims made by Mr. Aleynikov's attorney that the prosecution was "vindictive" or that there was any collusion between state and federal prosecutors, saying there was no evidence to support such allegations.

He was also unswayed by arguments that Mr. Aleynikov is a highly skilled, law-abiding citizen who has "suffered enough." He said that "without disputing the defendant's accomplishments, or rejecting their significance, his contributions do not justify dismissal of charges."

In his ruling, the judge also said Goldman Sachs was harmed by Mr. Aleynikov's alleged actions because it was forced to conduct an internal investigation and experienced other disruptions. "This is not a victimless crime. Clearly, Goldman Sachs and their clients are victims of defendant's actions," the judge wrote in his ruling.

The judge said Mr. Aleynikov faces up to four years in prison in the state case.

High-speed trading firms and other financial companies aggressively protect their computer code, believing it gives them a competitive advantage. Goldman required its employees to sign a confidentiality agreement and believes any software created by them on the job was the property of the investment bank. Goldman declined comment Tuesday.

Federal prosecutors had alleged that Mr. Aleynikov secretly copied Goldman's source code in his last days with the investment bank in June 2009 and intended to use it to build a similar trading platform at his new employer, a startup firm in Chicago. His lawyer didn't dispute at trial that Mr. Aleynikov had taken the code but argued he only intended to use portions of the downloaded code that were "open source," or freely available.

The U.S. Second Circuit Court of Appeals, which overturned his federal conviction in February, found that Mr. Aleynikov violated his obligations to the company but that his actions didn't constitute a crime under the law for which he was convicted.

State prosecutors have since alleged that Mr. Aleynikov violated New York state law and said that he can be prosecuted based on the legal concept of "dual sovereignty," which says that state governments and the federal government can each bring charges against one person for practically the same thing.

The Manhattan District Attorney's Office, which declined comment Tuesday, said in a previous court filing that it needed to bring the case to ensure that Mr. Aleynikov "is held criminally responsible for committing the underlying wrongdoing."

Legal experts say the concept of double jeopardy is a challenging one. "I think it's one of the most complicated provisions in the Bill of Rights because the language is so vague," said Bennett Gershman, a professor at Pace Law School. He said the legal code is so vast that the same underlying crime can be tried under several different state and federal statutes. "At the time of our founding, there were only a handful of crimes. Now there are thousands and thousands of crimes," he said.

Mr. Aleynikov "should not have to endure this burden again," said New York criminal defense attorney Priya Chaudhry a partner at Harris, O'Brien, St. Laurent & Houghteling LLP. "The emotional and financial cost of defending a prosecution is very heavy," she said.

James Cohen, a law professor at Fordham University School of Law, said: "As much as it stinks, and I think it does stink, the law permits [prosecutors] to do it."