Programmer Gets 8 Years for Stealing Trade Code

     MANHATTAN (CN) - Sergey Aleynikov, a former Goldman Sachs programmer convicted in December of stealing trade secrets from the bank, was sentenced Friday to 97 months in prison.
     The sentence is about four times higher than the two-year sentence recommended by the probation department, but it fell at the lower end of the sentencing guidelines the government requested.
     A jury convicted Aleynikov on Dec. 10 of stealing the code behind Goldman Sachs' high-frequency trading system, which places orders as market data gets processed through its system.
     "This is a business where fractions of a second count," Assistant U.S. Attorney Joseph Facciponti said at the sentencing hearing.
     Defense attorney Kevin Marino has balked at the prosecution since his client's arrest at the hands of FBI Agent Michael McSwain, a Goldman Sachs shareholder. Marino says Swain rushed to judgment against Aleynikov after receiving tips from the bank's employees.
     Aleynikov has claimed throughout trial and at his sentencing hearing that, although he downloaded Goldman Sachs' proprietary code, he only wanted to use it as a reference to extract open-source code that belonged to the public.
     During the sentencing hearing, Marino continued to defend Aleynikov's innocence, claiming that the government demanded "pound of flesh" by seeking such a heavy sentence.
     Marino said that the sentence prosecutors recommended was many times higher than that of the only other person convicted of the same crime.
     This month, former Société Générale trader Samarth Agrawal received a three-year sentence after he stole the entirety of his employer's high-frequency trading software and offered it to Tower Research Capital in hopes that the hedge fund would hire him.
     By contrast, Aleynikov took only a portion of the Goldman Sachs code, and his prospective employer at Teza did not want it, Marino said. In a rare example of understatement, Marino insisted that the government sought a heavy sentence in retaliation for the "unpleasant fight" the parties had at trial.
     The defense attorney had said during summations that the prosecutors should be "ashamed" for leveling charges against his client that were "bogus, bogus, bogus."
     Marino added that Aleynikov should not be punished because he asserted his "constitutional right" to a trial and had a lawyer that did not "buckle under" the government's arguments.
     The government vigorously denied that the contentious trial impacted its sentencing recommendations.
     "This is not about malice," Facciponti said. "The government is not here to collect a pound of flesh."
     Marino maintained that the fight between defense attorney and prosecutors overshadowed his Russian immigrant client.
     When Aleynikov arrived in the United States in 1990, he had $300 in his pocket, Marino said. After securing advanced degrees at Rutgers University, Aleynikov earned a six-figure salary to support a family of three children.
     Since the trial, Aleynikov lost his job, and his wife abandoned him, Marino said.
     "He had the American dream," Marino said. "Now, he has nothing."
     Pleading for leniency, Aleynikov told the judge in a heavy Russian accent, "I regret the foolish decision to download," and asked her to consider the impact on his three daughters before sentencing him.
     U.S. District Judge Denise Cote was unmoved, and said it was "unfair and inappropriate to shift the blame of the sentencing guidelines to the government."
     "[Aleynikov's] conduct deserves a significant sentence because the scope of his theft was audacious - motivated solely by greed, and it was characterized by supreme disloyalty to his employer," Cote said.
     In addition to 97 months in prison, she imposed a fine of $12,500, and three years of supervised release.
     The judge also denied, without prejudice, Marino's request for Aleynikov to self-surrender. Marino said that Aleynikov was not a flight risk because he currently has no passport and has always shown that he "believes in the system."
     "He believes he will win on appeal. So do I," Marino said.
     The defense attorney added that Aleynikov voluntarily returned from Moscow, where he was visiting his mother, after he was indicted and before trial, and never tried to flee in the 10 weeks following his conviction.
     Marino said that the government was "mean-spirited" to deny a brief period of bail for Aleynikov to say goodbye to his daughters.
     "I don't think it's mean-spirited," said Cote, who denied the defense's request but allowed them the opportunity to file at a later date.
     Liya Aleynikov, a Moscow resident who visited America throughout her son's trial and sentencing, said after the hearing, "My son is an honest man. This is not right."
     The U.S. Attorney's Office lauded the sentencing.
     "Protecting the proprietary information of America's companies is critically important," Manhattan U.S. Attorney Preet Bharara said "Today's sentence sends a clear message that professionals like Sergey Aleynikov who abuse their positions of trust to steal confidential business information from their employers will be prosecuted and punished."