Ex-Goldman Programmer Faces State Case After Beating U.S.

Former Goldman Sachs Group Inc. (GS) computer programmer Sergei Aleynikov, who successfully fought federal allegations that he stole internal bank code, will be arraigned on related state charges, his lawyer said.

Aleynikov will face charges in Manhattan criminal court of copying scientific material, a felony, and fraudulent accosting, a misdemeanor, defense attorney Kevin Marino said today in a telephone interview.

Aleynikov was freed earlier this year after his conviction in Manhattan federal court for stealing the bank’s high-speed trading code was reversed by a U.S. appeals court in New York. He had been convicted in December 2010.

“Mr. Aleynikov spent a year in prison for a federal crime he did not commit,” said Marino, of the firm of Marino Tortorella PC in Chatham, New Jersey. “It’s hard to imagine the authorities would find it appropriate to pursue state charges arising from the same set of facts. But apparently that is what they’ve decided to do. We look forward to defending him.”

Last Day

Federal prosecutors claimed that, on his last day of work at New York-based Goldman Sachs in June 2009, Aleynikov uploaded hundreds of thousands of lines of source code from the firm’s high-frequency trading system.

The federal government alleged that he circumvented Goldman Sachs’s security, sent the code to a server in Germany, compressed and encrypted it, and took it with him to a meeting with new employers in Chicago. Prosecutors argued Aleynikov wanted it as a “cheat sheet” to start a trading system at his new job. Aleynikov pleaded not guilty to the charges.

The U.S. Court of Appeals in New York, which had ordered Aleynikov freed from prison in Fort Dix, New Jersey, in February, said the two laws federal prosecutors used to charge Aleynikov, the National Stolen Property Act and the Economic Espionage Act, didn’t apply to his case.

“We conclude that Aleynikov’s conduct did not constitute an offense under either the NSPA or the EEA, and that the indictment was therefore legally insufficient,” Chief U.S. Circuit Judge Dennis Jacobs wrote in the opinion, on behalf of two members of a three-judge panel. U.S. Circuit Judge Guido Calabresi filed a separate opinion agreeing that Aleynikov didn’t violate the laws.

Citizen

Aleynikov, a naturalized U.S. citizen born in Russia, was serving an eight-year prison sentence at the time his conviction was overturned.

The New York state scientific copying charge, a class E felony under state law, carries a maximum sentence of four years in prison, while the accosting charge, a type of fraud allegation, is a class A misdemeanor and carries a maximum term of one year.

Ben Petok, a spokesman for Manhattan District Attorney Cyrus Vance Jr., and Michael DuVally, a spokesman at Goldman Sachs, declined to comment on the case.

The case is U.S. v. Aleynikov, 11-1126, U.S. Court of Appeals for the Second Circuit (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York State Supreme Court in Manhattan at cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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