* Sergey Aleynikov formally indicted in New York state court
* Aleynikov charged with stealing trading code from Goldman
* Ex-programmer already served prison time in federal case
By Joseph Ax
NEW YORK, Sept 27 A former Goldman Sachs Group
Inc computer programmer indicted on charges of stealing
trade secrets has rebuffed a plea offer that would keep him out
of prison, his lawyer said on Thursday.
Sergey Aleynikov, 42, was formally indicted Thursday on New
York state criminal charges of stealing proprietary trading code
from the bank. The indictment is the latest development in a
years-long legal battle between Aleynikov and federal and state
Manhattan Assistant District Attorney Joanne Li told
Manhattan State Supreme Court Justice Ronald Zweibel that her
office had offered Aleynikov a non-jail sentence in exchange for
a guilty plea.
Aleynikov's lawyer, Kevin Marino, said his client had
rejected the offer. Marino told the judge he would move to
dismiss the case based on double jeopardy - prosecution twice
for the same offense - and accused state prosecutors of having
"no sense of decency."
"The precise factual circumstances that underlie these
charges have already been fully adjudicated," he said. "There's
nothing remotely lawful or constitutional about what's going on
... He left Russia for freedom and the American way, and he got
Franz Kafka and Goldman Sachs."
The Aleynikov prosecution has been closely watched as U.S.
authorities are on a push to tackle complex cyber crime, an area
of criminal law that has not been well-tested in courts amid
debate about which laws apply and what types of conduct can be
considered criminal behavior.
Prosecutors have accused Aleynikov, a dual citizen of the
United States and Russia, of stealing code used in Goldman's
high-frequency trading system in 2009 before leaving to join
Teza Technologies LLC, a rival startup in Chicago.
He was arrested in August and charged by New York state
prosecutors, six months after the 2nd U.S. Circuit Court of
Appeals overturned his 2010 federal conviction on charges tied
to the same conduct.
Aleynikov had served nearly one year of an eight-year prison
sentence before the appeals court ordered him released. If
convicted in state court, Aleynikov could face up to four years
His conviction was reversed in part because the appeals
court said the Justice Department failed to show that the stolen
code was intended for "interstate commerce," a necessary element
under the federal Economic Espionage Act.
Aleynikov entered a plea of not guilty Thursday to two
counts of unlawful use of secret scientific material and one
count of unlawful duplication of computer-related material.
Assistant District Attorney Joanne Li said the case does not
violate double jeopardy and pointed out that Marino himself
appeared to suggest in federal court papers that this type of
offense is more properly prosecuted in state court.
Some legal experts have said the state may be able to
prosecute Aleynikov because it represents a different
jurisdiction and because the state statute underlying his
indictment has elements that differ from the federal law.
Earlier this week, Aleynikov sued Goldman in New Jersey
federal court for $2.4 million in legal fees, demanding that the
bank cover his costs in fighting the federal prosecution. The
lawsuit claims Delaware General Corporation Law and the bank's
bylaws entitle corporate officers to indemnification when they
successfully defend themselves against charges.
Aleynikov will remain free on $35,000 bail. Prosecutors will
permit him to travel to Russia for approximately one month to
visit his mother, who is undergoing cancer treatment.
The case is People v. Aleynikov, New York State Supreme
Court, New York County, No. 60353/2012.