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Controversy Over Alleged ‘Confession’|at Goldman Sachs Trading Software Trial

MANHATTAN (CN) - Prosecutors and defense counsel for former Goldman Sachs programmer Sergey Aleynikov, accused of stealing proprietary code for the company's high-frequency trading software, sparred Tuesday over a signed statement that Aleynikov made in the presence of an FBI agent on the night of his arrest.

During cross-examination of FBI Agent Michael McSwain, Aleynikov's defense attorney dripped sarcasm when referring to the statement as a "sworn confession," and said it showed only that Aleynikov wanted to use open-source material from the Goldman Sachs code.

Prosecuting attorney Joseph Facciponti focused on edits made to the original confession and suggested that Aleynikov "changed his story" over the course of his four-hour interrogation.

But Agent McSwain testified that Aleynikov behaved like a "gentlemen" during his arrest and interrogation, cooperated with requests to locate his hardware, provided information, waived his right to an attorney and signed a sworn statement.

McSwain said he arrested Aleynikov on July 3, 2009, as the programmer's flight landed in Newark. A day earlier, Aleynikov allegedly had attended a meeting in Chicago with Teza Technologies, the trading company that recruited him from Goldman Sachs.

Upon his arrest, Aleynikov told the agent, "This must be a mistake," McSwain said.

The government objected, and the comment was stricken from the record because Aleynikov said this before he was read his Miranda rights.

McSwain said that Aleynikov gave him consent to search his home within 11 minutes, agreed on the text of his statement in about 45 minutes, and was interrogated for approximately two hours.

Aleynikov told the FBI agent that he had Goldman Sachs code on multiple computers in his house, may have linked his network to his wife's computer and had files on his flash drive, McSwain said.

The agent said that Aleynikov told him he wanted the code only to study it, "like a person would in college," to remember his strategies for using open-source code.

When asked why he uploaded the files to a German server, Aleynikov replied that he had no idea that the free server that he found online, called, was foreign, according to McSwain.

In a statement dictated to the agent, Aleynikov said, "On or about June 5, 2009, I created a tarball in an effort to collect open source work on Goldman Sach's server to which I had no account. I had previously worked on the files ... At a later date, I downloaded the software on my home computer, laptop and thumb drive ... These files have not [been] shared with any person or corporation. It was not my intent to be involved in any malicious action."

He ended the statement by promising to "cooperate fully to find the full allocation of files on my computers I downloaded the software to."

Aleynikov's interrogation at the FBI New York office in Federal Plaza ended at around 1:45 a.m. on July 4, 2009.

The day before McSwain testified, the government filed a motion to exclude evidence that Agent McSwain is a Goldman Sachs shareholder.

The defense did not ask McSwain about his 50 shares of Goldman Sacks stock during cross-examination. It is unclear whether attorneys on either side discussed the motion with presiding U.S. District Judge Denise Cote.

If convicted, Aleynikov could face up to 25 years in prison. The defense plans to call witnesses immediately after the government rests its case, which is expected to happen this afternoon (Wednesday).

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