Court Overturns Conviction of Ex-Goldman Programmer

http://dealbook.nytimes.com/2012/02/17/court-overturns-conviction-of-ex-goldman-programmer/

by kanamekun • 14 years ago

124 53 14 years ago

dealbook.nytimes.com

It appears his acquittal was based on a technicality (language within the Economic Espionage Act) and he has pretty much admitted that he did something wrong (uploaded it to a server in Germany to bypass Goldman's security):

  At trial, Mr. Marino, the lawyer for Mr. Aleynikov,
  acknowledge that his client breached Goldman’s
  confidentiality agreements, but insisted that he did not
  commit a crime.

So, it would seem that Goldman should rightly be rather upset about this, as much as I dislike Goldman, they seem to be in the right here?

veyron2• 14 years ago

The issue in this case wasnt over whether Aleynikov did something wrong (he even admitted as much). The issue is over how he should be punished. Goldman should be upset, but that doesnt necessarily mean he deserves the degree of punishment that the Economic Espionage Act entails.

pemulis• 14 years ago

I wonder if Teza even used the code Aleynikov took with him. If they didn't, would he even face civil penalties?

roel_v3• 14 years ago

"The issue is over how he should be punished."

Eh, no, that's not what the issue is about. The article states explicitly that no reason for the reversal was given (yet), but it seems to be about the extent of 'interstate commerce'. I.e., a purely technical legal point, having nothing to do with the material matters in the case.

tpatke• 14 years ago

I used to work at Goldman's and I can tell you that they will be absolutely furious about this. I have never worked at a company so paranoid about having work stolen. Once - a friend of mine sent me an email with a tag-line with a bit of code in it. When I replied the email filters picked it up and I had to explain to my boss why I was trying to "export" Goldman's code. They are nuts about it.

Goldman put a lot of time and energy into making an example out of this guy. He blatantly "did it" - they had recorded phone conversations of him talking to his new boss and uploading code immediately after. I know the details because we received almost weekly reports on the case via the corporate intranet (in the "news" section). Goldman wants their people scared so nobody else tries this.

I always found it a bit odd because the court sentenced this guy to 8 years. Ummm... ok. But why is Fabrice Tourre still walking around? Justice indeed.

AznHisoka• 14 years ago

is the culture there as back-stabbing and ruthless as it seems like to outsiders? Or is it just an exaggeration and people are mostly nice and pleasant, albeit ambitious?

spinlock• 14 years ago

Forget Fabrice Tourre, how about John Corzine? The government isn't even going to use the law _that he created_ to go after him for stealing client money.

kamagmar• 14 years ago

He didn't intentionally upload code to Germany. He uploaded to xp-dev.com, and the server happened to be in Germany.

pwaring• 14 years ago

It's fair that they're upset, 8 years in prison seems overly harsh though. In fact, any time in prison seems a bit over the top for what is essentially a breach of contract and therefore a civil matter between Goldman and the ex-employee.

mistercow• 14 years ago

> 8 years in prison seems overly harsh though

Seriously, it's not like he sold a 4 oz of weed or anything.

publicus• 14 years ago

Most Goldman exec should be executed already for crimes against the United States if that guy get's 8 years.

j_baker2• 14 years ago

I think this is a case where the right thing happened for the wrong reason. I don't doubt that the defendant wronged Goldman Sachs. But it's clearly absurd that he should have to spend 8 years in federal prison for it.

fleitz2• 14 years ago

It's not a technicality, they charged him under an inappropriate statute. If you punch someone and get charged with murder then you'll be acquitted since you did not commit the alleged crime of murder. It's not a technicality but incompetence on the part of the prosecutor.

There probably is a statute that is appropriate for this but didn't carry enough time to satisfy the prosecutor. Prosecutors often inflate charges so people will deal down to a lesser charge.

To me it sounds like he's admitted to a tort which GS could have resolved on its own with out using public resources.

mjwalshe2• 14 years ago

Well I can't see how any "resonable" operson would not say that a trading platform used in an international and across state boundarys is not a “product produced for interstate commerce”

This is one of those bonkers decisions by judges a bit like the famous Prince Philip Prestel Hack back in the 70's

Basicaly the judgement was that an electronic key is compeltly diferent to a physical one - WTF!

I used to work for the guy who had been in charge of that system

_delirium2• 14 years ago

The disagreement, from what I can tell in this brief summary with no opinion out yet, doesn't seem to be over the "interstate" part so much as the "product" part. The federal government's Constitutional commerce-clause power almost certainly includes the ability to regulate platforms like this Goldman platform, since it's heavily tied up in interstate (and international) commerce. But the wording of this particular criminal law, the Economic Espionage Act, arguably applies only to "products" sold in interstate commerce, not internal software that isn't for sale anywhere, even if used internally for purposes closely tied up with interstate commerce. At least, that's what his lawyers appear to have successfully argued.

tzs• 14 years ago

I haven't read the court's decision to see exactly what part of the statute the guy was charged under and the court said did not apply, but the wording of the part that looks like it would be the right part says:

   Whoever, with intent to convert a trade secret, that is related
   to or included in a product that is produced for or placed in
   interstate or foreign commerce

I'd expect the internal software to qualify under the "related to" part, as it is related to their trading product which is heavily involved in interstate commerce.

anigbrowl• 14 years ago

'Commerce' here means something sold in the open market, not something used privately as an aid to market trading. Goldman's trading software was not for sale to others, so it had not been placed into the stream of commerce.

gsibble• 14 years ago

Even if he violated confidentiality agreements, wouldn't that be a civil violation instead of a criminal one? Why is the federal government prosecuting what should be a civil case?

pja3• 14 years ago

GS wanted an example made, so they got the FBI to prosecute. 8 years inside makes for a really big stick to wave in front of the rest of their programmer base.

Unfortunately for them, the court has ruled that the statute in question didn't apply, so the ruling has been reversed. Assuming double jeopardy applies, he can't be prosecuted (by the government) again for the same acts. I think that GS could still sue for breach of contract, but their damages would presumably be limited to actual harm done wouldn't they?

fleitz2• 14 years ago

They could be but they could seek punitive damages and/or treble damages. Honestly, in the case of getting sued by GS costs are probably the biggest factor.

jemfinch3• 14 years ago

It seems like they can trivially retry him under criminal copyright infringement laws. Is there some technicality preventing the justice department from pursuing that course?

Does anyone know if Goldman is simultaneously pursuing civil resource for copyright violation?

pja3• 14 years ago

Double jeopardy applies here doesn't it? You don't get to keep prosecuting people for one act until one of the cases sticks: You have to pick one breach of the law, or bundle a bunch of them into a single prosecution, and go to court on that basis don't you?

setrofim_• 14 years ago

IIRC, double jeopardy doesn't stop both criminal and civil charges from being filed for the same offense (it only applies to being criminally charged multiple times)?

jemfinch3• 14 years ago

Double jeopardy only applies to being tried for the same crime twice. It doesn't prevent you from being tried for a different crime that you committed simultaneously with the one you were acquitted of.

You can be acquitted of murder and then tried for conspiracy to commit murder; you can be acquitted of "economic espionage" and then be tried for criminal copyright infringement because they're two separate crimes, though committed in the same act.

mikeryan• 14 years ago

Goldman is simultaneously pursuing civil resource for copyright violation?

They could be but really why? Its a single guy, with likely limited monetary resources, and unless they can prove large monetary or punitive damages they wouldn't win much. I guess they can go the "make his life a living hell, dissuade folks from doing this in the future" kind of attitude but its a costly way to go about it.

jonhendry• 14 years ago

"with likely limited monetary resources"

He was going to make about $1.2 million/year at the new job, and made $400k at Goldman. If he's still employable for HFT development, he's going to make a lot of money over the rest of his career.

jemfinch3• 14 years ago

They should ruin him. And I'm sure Goldman has enough lawyers on staff/retainer that they can make his life a living hell for relatively little marginal cost.

msutherl• 14 years ago

How would you go about stealing code from Goldman without being detected?

mickey7• 14 years ago

understand it and replicate it

veyron2• 14 years ago

Cannot be emphasized enough. They can get you for copying code but not for reimplementing functionality if you understood how it was implemented.

AUmrysh• 14 years ago

Label it as high risk loan certificates and smuggle it out in a briefcase.

juiceandjuice• 14 years ago

If you can't think of some clever ways of doing this (and getting around machine restrictions) you probably shouldn't be employed at GS.

benmmurphy• 14 years ago

use steganography and smuggle it out inside pictures you upload to your facebook

Bootvis• 14 years ago

You can't use Facebook at GS... E-mail should work but might get suspicious.

gaius2• 14 years ago

I'm not sure why you would, without Goldman's entire infrastructure (SecDB, Slang, etc) it probably wouldn't be that useful. The only thing you could "steal" is what's between your ears anyway.

metageek• 14 years ago

You'd probably have to write new code; but you could port the algorithms, which are the distillation of their trading expertise. That'd boost you several years ahead in domain knowledge—and, as GS pointed out, you'd also know how GS was going to trade, which would help you predict market movements.

I suspect the latter wouldn't actually be all that accurate, though, since all those split-second decisions are going to be highly dependent on how fast everything runs, which means your GS emulator can't make the same decisions unless you port everything exactly.

staunch• 14 years ago

GOOD. Fuck Goldman for being able to sic the FBI on an ex-employee who went to a competitor. If he copied code that's obviously a civil matter. How many tech companies have had the same thing happened to them? How many did the FBI get involved in? Close to zero I'd guess over 40 years.

They get special treatment from law enforcement because they're rich, powerful, and connected. It was a total travesty that the FBI even became involved in the first place.

Not that I'm justifying his actions. He did wrong and there should be consequences -- but Goldman shouldn't get to use the FBI as their enforcers.

Court Overturns Conviction of Ex-Goldman Programmer

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