from the banking-conduct-that-warrants-prosecution dept.
The New York Times and The Register report that former Goldman Sachs programmer Sergey Aleynikov's conviction for "unlawful use of secret scientific material" has been overturned:
[...] celebration may not last long. State prosecutors in Manhattan have already indicated they may appeal the decision issued Monday, which threw out a jury's verdict. Once before, Mr. Aleynikov had believed he was in the clear, when a federal appeals court overturned his conviction under a federal corporate espionage law in 2012. The appellate court ruled that federal prosecutors in Manhattan had misapplied the law, and it ordered Mr. Aleynikov to be immediately released from a federal prison.
Less than a year later, however, Mr. Aleynikov was back in court defending himself, after state prosecutors in Manhattan charged him with violating state computer-theft-related laws. Now Justice Conviser — much like the federal appellate court before him — ruled that the decades-old state law that Mr. Aleynikov was convicted of violating did not apply to the accusations against him.
Justice Conviser said he did not find sufficient legal evidence to support the jury's conviction in May, which came after eight days of deliberation and two dozen requests for testimony to be read back or the statute's arcane terminology to be explained. He said the jury's confusion had been understandable, given that the "unlawful use of secret scientific material" criminal statute that Mr. Aleynikov was charged with violating was enacted in 1967 and predates much of the digital age. The judge said the state law was out of step with modern electronic communications and needed to be amended. He said that if prosecutors wanted to criminalize the kind of conduct Mr. Aleynikov engaged in when he downloaded portions of Goldman's source code onto his personal computer before leaving for a new job in June 2009, they should petition the Legislature to either amend the statute or pass a new law.
"We update our criminal laws in this country, however, through the legislative process," Justice Conviser said. "Defendants cannot be convicted of crimes because we believe as a matter of policy that their conduct warrants prosecution." A conviction on a charge of unlawful use of secret scientific material required prosecutors to prove that Mr. Aleynikov had made a "tangible" reproduction of the files he downloaded. But in his ruling on Monday, Justice Conviser said prosecutors had not submitted any evidence that the source code downloaded by Mr. Aleynikov "could be touched" or had "physical form," which is the essence of something being tangible. [...] The judge noted that the District Attorneys Association of the State of New York supported several legislative proposals to "modernize" the state's criminal laws with regard to computer crime.
Here is our previous story on Aleynikov's conviction.
Related Stories
Former Goldman Sachs programmer Sergey Aleynikov, one of the central figures in the high-frequency trading exposé Flash Boys, has been found guilty on one count of "unlawful use of secret scientific material" for "stealing" high-speed trading code from Goldman Sachs. He was acquitted of "unlawful duplication of computer related material," and another "secret scientific material" charge may be dismissed by mid-June. He may face between one-and-a-half and four years in prison, although there is no mandatory minimum for the charge, and the judge has indicated that he is likely to be lenient.
"Aleynikov left Goldman Sachs in 2009 for a high-speed trading startup and was arrested by the FBI after he was caught downloading a copy of the firm's code to his home computer." Aleynikov's first trial resulted in a sentence of 97 months in prison for two counts of theft of trade secrets, but the conviction was overturned by the United States Court of Appeals for the Second Circuit. This time around, the State of New York charged Aleynikov. "Manhattan District Attorney Cyrus Vance called the source code that Aleynikov had copied [Goldman Sachs'] 'secret sauce'."
The case almost ended up in a mistrial due to a dispute between two jurors which led to their dismissal. One juror accused another of "food tampering" because an avocado was missing from her sandwich, and said she took a blood test to determine whether she had been poisoned. The judge called the accusations "completely unfounded," and Aleynikov's lawyer agreed to drop a request for a mistrial and proceed with a 10-member jury. Aleynikov's lawyer has until May 15 to file a motion for dismissal.
(Score: 2, Insightful) by Anonymous Coward on Tuesday July 07 2015, @08:18AM
Why do the prosecutors often go for the arcane laws which really deal with stealing camels? Is it because they offer the chance to have the suspect stoned to death (perhaps even more so than copyright infringement) if found guilty? Are they throwing the book at the man because Goldman is too big to fail?
(Score: 5, Insightful) by Geezer on Tuesday July 07 2015, @10:32AM
Because prosecutors hate to lose. They are politicians graded on their win/loss records.
(Score: 3, Insightful) by gargoyle on Tuesday July 07 2015, @10:33AM
The second one, they want a conviction, so they are trawling every law they can find which might result in one.
(Score: 4, Informative) by MrGuy on Tuesday July 07 2015, @02:46PM
As much as the RIAA/MPAA would like us to forget, copyright infringement is PRIMARILY a civil matter in the US - it's a dispute between parties, and can lead to civil sanctions such as disgorgement, injunctive relief (such as impounding offending goods), etc. It's why a DCMA takedown doesn't come with a fine.
That's not to say that copyright infringement CAN'T be criminal (remember the FBI warning about pirating your old VHS tapes?) However, the law here is fighting the last war (bootlegging copyrighted content), and doesn't appear (IANAL) to apply terribly well in this situation. The criminal law around copyright (especially the actions that rise to the level of a felony) tend to be around running a significant for-profit enterprise around copyright infringement (for example, creating 1000 bootleg CD's to sell for $5 each from the back of a car). And many of the laws around "what rises to a felony?" specifically talk about reproductions of copyrighted audio or audio visual material, and talk about distribution (or at least intent to distribute) as a major factor.
In this case, the accused didn't "distribute" the copyrighted material - he took a copy for himself. You could argue he did so with the intent to profit from his infringement, but even that's a little squirrely - he didn't intend to profit DIRECTLY from infringement (e.g. by selling the code). Instead, he planned to profit by USING the infringing code to guide his business decisions. That's not exactly the same. And in any case, while his intent might have been profit, it's not clear that he actually DID profit - it appears he was stopped before he used the code.
This where the judge seems to be coming down - what Mr. Aleynikov did was clearly unauthorized, and done with bad intent, but under the law, it doesn't constitute criminal behavior, because the law hasn't caught up to the kinds of bad behavior that's possible today that wasn't anticipated when the current laws were written.
(Score: 2) by Joe Desertrat on Tuesday July 07 2015, @05:42PM
This where the judge seems to be coming down - what Mr. Aleynikov did was clearly unauthorized, and done with bad intent, but under the law, it doesn't constitute criminal behavior, because the law hasn't caught up to the kinds of bad behavior that's possible today that wasn't anticipated when the current laws were written.
Recent history suggests that when the law attempts to catch up things will be worse for all of us, except the industry whose lobby which manages to get its version of the law passed.
(Score: 3, Interesting) by Gravis on Tuesday July 07 2015, @09:33AM
on one hand he didn't break any laws but on the other, he did work for Goldman Sachs.
if nothing else, this should be a lesson on why you should not work for criminals.
(Score: 3, Insightful) by hemocyanin on Tuesday July 07 2015, @02:49PM
Maybe the relentless prosecution is because GS hates him. They do own the government after all.
(Score: 5, Interesting) by MichaelDavidCrawford on Tuesday July 07 2015, @10:31AM
Americans cannot be prosecuted for acts that were legal at the time they carried them out.
That is, unless they are Communists: Julius and Ethel Rosenburg were executed for treason. I expect they broke some manner of law but at the time they passed the Manhattan Project secrets to the Soviet Union, the Soviets were our allies.
Klaus Fuchs had the sense to skip town. While he did time, the British did not charge him with treason.
Not long after the fall of Communism, a formerly-Soviet Russian general claimed that J. Robert Oppenheimer specifically requested that Fuchs pass the bomb secrets to the Soviets, so they would have some hope of preventing the united states from laying waste to their homeland.
Everyone suspected he did so, however no one could prove it. "In the Matter of J. Robert Oppenheimer" is a transcript of the hearing which resulted in him losing his clearance.
Edward Teller established the Lawrence Livermore National Laboratory in California because Oppenheimer, still the Scientific Director at Los Alamos, opposed the development of the Hydrogen Bomb, despite that Oppenheimer intended to create "The Heavy" from the very start.
Yes I Have No Bananas. [gofundme.com]
(Score: 1) by khallow on Tuesday July 07 2015, @06:40PM
That is, unless they are Communists: Julius and Ethel Rosenburg were executed for treason. I expect they broke some manner of law but at the time they passed the Manhattan Project secrets to the Soviet Union, the Soviets were our allies.
Glancing at Wikipedia, it appears that the primary point was to make an example of anyone who didn't cooperate. Tell us what you know, or you'll end up like the Rosenbergs did. Also, the Rosenbergs actually were accused of violating a part of the Espionage Act of 1917, which is one of the more notorious laws still on the books from that era. And the law apparently is vaguely written enough so that the Rosenbergs' accused activity would have fallen under the Act even if Russia wasn't an enemy of the US at any time.
To convey information with intent to interfere with the operation or success of the armed forces of the United States or to promote the success of its enemies. This was punishable by death or by imprisonment for not more than 30 years or both.
(Score: 3, Insightful) by FatPhil on Tuesday July 07 2015, @11:01AM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 0) by Anonymous Coward on Tuesday July 07 2015, @04:13PM
It's an amplification. By example that's far easier to understand: It is illegal to commit fraud as a general rule. Said rule describes fraud. It's further illegal to commit fraud via mail or (separate act) over wires. These seem self-referential, but in reality they add extra penalties for subclasses of fraud (by area). Similar laws appear everywhere.
(Score: 3, Informative) by DeathMonkey on Tuesday July 07 2015, @05:45PM
How can a statute contain a phrase like "unlawful use of secret scientific material" in order to define what is illegal?
That's the charge, not the definition.
N.Y. PEN. LAW § 165.07 : NY Code - Section 165.07: Unlawful use of secret scientific material [findlaw.com]
A person is guilty of unlawful use of secret scientific material when, with intent to appropriate to himself or another the use of secret scientific material, and having no right to do so and no reasonable ground to believe that he has such right, he makes a tangible reproduction or representation of such secret scientific material by means of writing, photographing, drawing, mechanically or electronically reproducing or recording such secret scientific material. Unlawful use of secret scientific material is a class E felony.
(Score: 2) by FatPhil on Wednesday July 08 2015, @07:51AM
However, that still looks awfully written. Seems designed to have loop-holes aplenty. Why explicitly enumerate nefarious means to the actually illegal end? That's like saying breaking and entering is the use of a crow-bar, jemmy, or hammer to open a door or window in order to enter an office or house. But, my lord, I used a screwdriver and it was a warehouse window...
Enumerating badness in legislation is just as dumb as it is in virus scanners.
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 5, Interesting) by bootsy on Tuesday July 07 2015, @12:10PM
I'm pretty sure this goes on quite a bit in the industry. Let me try and back that statement up.
One large bank I worked for had a new starter who was tasked with writing an OLAP cube type set up, a project that should have taken 3-6 months. He had turned up on the first day with a CD-R and within a week a usable system was up which was still in heavy use when I left. Apparently there was a very similar system in his old place of work.
In another place, a big team was brought in to build a new trade capture setup. Halfway through the project they all quit on the same day and went on to start a company. That is fairly common as people with knowledge of things like E-trading Market gateways and trade capture of exotic products tends to be quite rare.
Every bank I have every worked for has had one or more Quant libraries where the code was owned and written by the Quant team. You could never get access to the source code and they guarded it and were treated like a firm within a firm. Even though it was the company's code they treated it like their own.
In short you can get a job offer by taking the code, err I mean your expertise elsewhere in the financial industry, and there are many opportunities for people to quit and start their own small companies as the expertise is not widely shared. I have personally never done this but I have seen people quit or blackmail the employing bank by threatening to do so.
Every contract I have signed has made it clear that the code developed under company time was owned by the company. I am not sure why they cannot take a civil case against Mr Aleynikov for breaking this clause.
(Score: 2) by Runaway1956 on Tuesday July 07 2015, @01:53PM
Good post - you're already +5 so I can't give you another "interesting".
And, this really IS what galls me about business. If you're high enough up that you can steal millions and billions, then you're usually above the law. I guess the law for those people is something like "choose your target wisely". These same people who are "appropriating" code for their own use are quite likely to take some chump to court for screwing with "their" code after they go into business. Some of these same people may be working with copyright/patent trolls.
(Score: 1, Touché) by Anonymous Coward on Tuesday July 07 2015, @04:22PM
The employment contracts these days say that the company owns the stuff you do on your own time, too. Not just what you do at work. You have to register any software you write as "work product".
(Score: -1, Troll) by Anonymous Coward on Wednesday July 08 2015, @12:30AM
Don't sign those.
Remeber: this is a woman's country. It's not like if you starve to death you're losing out on anything.
Or kill them.
There really needs to be a war.
I hope the south rises again and ends america.
(Score: 1) by linuxrocks123 on Wednesday July 08 2015, @03:11AM
Hi MikeeUSA, go away now please k thx.
(Score: -1, Troll) by Anonymous Coward on Wednesday July 08 2015, @03:27PM
Give your name and address and say that again.
(Score: 3, Interesting) by khallow on Tuesday July 07 2015, @07:54PM
I am not sure why they cannot take a civil case against Mr Aleynikov for breaking this clause.
I guess they want harsher retribution or obstruction than what one can get from a civil case. Even if these cases continue to be overturned, it'll mess up Aleynikov's business dealings for many years.
(Score: 0) by Anonymous Coward on Tuesday July 07 2015, @08:55PM
I have no knowledge about the case itself, but the judge's reasoning is troubling and reflects the inability of the judiciary to recognize the spirit of laws and applying them appropriately to technological advancements. It is this kind of reasoning that contributes to the gutting of the 4th Amendment because the 4th fails to mention things like computers, cell phones, etc.
(Score: 2) by twistedcubic on Wednesday July 08 2015, @03:38AM
I disagree. Once you consider copies using magnetic charges "tangible", you might as well accuse any former employee of corporate espionage unless they do a memory wipe, like in the movie "Paycheck". What you do with the data is what concerns criminal law. It is a major waste of tax dollars when the government prosecutes someone not for corporate espionage, not for even attempting corporate espionage, but for looking like they might possibly commit corporate espionage.