Court Overturns Conviction of Ex-Goldman Programmer

February 17, 2012

The New York Times on February 17, 2012 released the following:

“BY PETER LATTMAN

A federal appeals court reversed the conviction late Thursday of Sergey Aleynikov, a former Goldman Sachs programmer found guilty of stealing proprietary code from the bank’s high-frequency trading platform.

The United States Court of Appeals for the Second Circuit overturned the conviction and ordered the trial court to enter a judgment of acquittal. A judgment of acquittal generally bars the government from retrying a defendant.

The reversal was without explanation; it said an opinion would follow “in due course.”

The appeals court ruling came just hours after a three-judge panel heard oral arguments on Mr. Aleynikov’s appeal. Mr. Aleynikov, who was convicted in December 2010, is serving an eight-year sentence at a federal prison in Fort Dix, N.J.

“We are pleased and gratified that the court of appeals has roundly rejected the government’s attempt to rewrite the federal criminal laws,” said Kevin Marino, Mr. Aleynikov’s lawyer. “Mr. Aleynikov spent a year in prison and suffered many other losses as a result of these unjust charges, but he never lost faith in his ability to win an acquittal. This is a wonderful day in his life.”

Ellen Davis, a spokeswoman for the United States attorney’s office in Manhattan, declined to comment.

The reversal deals a major blow to the Justice Department, which has made the prosecution of high-tech crime and intellectual property theft a top priority. This case tested the boundaries of the Economic Espionage Act, a 15-year-old law that makes it a crime to steal trade secrets. Federal prosecutors held up the arrest of Mr. Aleynikov as an example of the government’s crackdown on employees who steal valuable and proprietary information from their employers.

The decision is also a loss for Goldman Sachs, which reported Mr. Aleynikov to federal authorities after it accused him of stealing computer code. The bank had portrayed itself as the victim of a brazen crime.

A crucial issue in the appeal — and a main focus of Thursday’s oral argument — was whether Mr. Aleynikov’s actions constituted a crime under the statutory language of the Economic Espionage Act. The debate centered on whether Goldman’s high frequency trading system was a “product produced for interstate commerce” within the meaning of the law.

Lawyers for Mr. Aleynikov argued that the bank’s trading platform was built for internal use and never placed in the stream of commerce. The government countered that the high-frequency trading system, which Goldman used to trade in markets around the globe, was clearly produced for interstate and foreign commerce.

Mr. Aleynikov’s arrest in 2009 drew attention to a new and lucrative corner of Wall Street. High-frequency trading uses complex computer algorithms to make rapid trades that exploit tiny price discrepancies. The trading became a substantial source of revenue at banks and hedge funds, and these companies vigilantly guard the code underpinning their trading strategies.

Armed with a degree in computer programming, Mr. Aleynikov came to the United States from Russia in 1990. His services were in demand at Goldman, which paid him $400,000 a year to write code for its high-frequency trading business, making him one of the bank’s highest-paid programmers.

He was lured away from Goldman by Teza Technologies, a new firm run by an executive from the Citadel Investment Group, a giant Chicago hedge fund. Teza offered to pay about triple what he made at Goldman.

During his last final days at Goldman, Mr. Aleynikov uploaded source code to a server in Germany that allowed him to do an end run around the company’s security systems. He was arrested shortly thereafter.

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.

Federal prosecutors portrayed Mr. Aleynikov as a thief who stole Goldman’s closely guarded code to help his new employer. After a two-week trial, the jury deliberated for just three hours before reaching a unanimous guilty verdict.

The ruling is the second time in as many months that the Federal Appeals Court in Manhattan has overturned a conviction secured by the United States attorney for the Southern District of New York. In January, the appeals court reversed the conviction of Joseph P. Collins, a former outside lawyer to Refco, the collapsed brokerage firm, citing judicial error.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Appeal

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To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Multi-Ton Cocaine Seizure from Interdicted Drug Smuggling Vessel

October 30, 2011

The Federal Bureau of Investigation (FBI) on October 28, 2011 released the following:

“TAMPA, FL— United States Attorney Robert E. O’Neill announces the recovery of an estimated 6,700 kilograms of cocaine from a submerged drug smuggling vessel in the Caribbean Sea. The vessel, a self-propelled semi-submersible vessel, or SPSS, was interdicted by the U.S. Coast Guard Cutter (USCGC) MOHAWK on September 30, 2011, in international waters of the Caribbean some 110 miles off of the coast of Honduras. The vessel sank during the interdiction, and USCGC MOHAWK detained the four crew members, who were later transferred to Tampa for prosecution.

Shortly after the interdiction, a multi-agency effort began to recover the suspected drug cargo of the sunken SPSS. This effort included the deployment of the FBI Laboratory’s Technical Dive Team, located in Quantico, Virginia, which conducted dive operations at the site of the submerged vessel from USCGC CYPRESS. These operations yielded evidence including packages of cocaine totaling an estimated 6,700 kilograms from the SPSS.

Today, this evidence arrived at Coast Guard Sector St. Petersburg aboard USCGC CYPRESS, where it will be transferred to the custody of investigators of the Panama Express Strike Force. The crew of the SPSS (Jorge Colomer, 47, of Honduras; Guilforth Romero, 24, of Honduras; Manuel Cuero, 30, of Colombia; and Marcos Salazar, 30, of Colombia) have been indicted by a federal grand jury in the Middle District of Florida for violation of the Drug Trafficking Vessel Interdiction Act of 2008 and are being prosecuted by the U.S. Attorney’s Office in Tampa. If convicted, each defendant faces a maximum penalty of 15 years in federal prison.

A similar recovery operation earlier this year yielded over 6,000 kilograms of cocaine from an interdicted SPSS that also sank in the Caribbean. The crew of that vessel is being prosecuted by the U.S. Attorney’s Office in Tampa.

An indictment is merely a formal charge that a defendant has committed a violation of the federal criminal laws, and every defendant is presumed innocent unless, and until, proven guilty.

This case is being investigated by OCDETF’s Panama Express Strike Force, comprised of agents and analysts from the Federal Bureau of Investigation, Drug Enforcement Administration, Immigration and Customs Enforcement’s Homeland Security Investigations, United States Coast Guard Investigative Service, Pinellas County Sheriff’s Office, and Joint Interagency Task Force South. It will be prosecuted by Special Assistant United States Attorney Austin Shutt.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

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To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Viktor Bout – Government Trial Exhibit 1002-T

October 21, 2011

The US government is prosecuting Viktor Bout for violating several federal criminal laws. The following is a transcript of a conversation allegedly between Viktor Bout and a confidential informant for the DEA. The informant testified in trial that Mr. Bout told the informant “Let’s go to war” as they waited for an elevator at the Sofitel Hotel in Bangkok, Thailand.

CASE: UNITED STATES v. VIKTOR BOUT
DATE: March 6, 2008
START TIME: 1:20 p.m.
FILE: N-63
LOCATION: Bangkok, Thailand
PARTICIPANTS: Viktor Bout, Andrew Smulian, Misha Belozerosky, Carlos, Mike, Ricardo, Unidentified female, and Unidentified male

Viktor Bout – Government Trial Exhibit 1002-T

We would like to thank George Mapp @dobroyeutro for providing us the document.

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To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Anthony V. Foster Indicted by a Federal Grand Jury with Public Corruption Charges

July 6, 2011

The U.S. Attorney’s Office Middle District of Florida on July 5, 2011 released the following:

“ST. PETERSBURG POLICE DEPARTMENT DETECTIVE INDICTED

Tampa, Florida – United States Attorney Robert E. O’Neill announces the return of a seven-count indictment by a grand jury charging Anthony V. Foster (39, St. Petersburg) with public corruption charges. Counts one through six charge Foster with a wire fraud scheme to deprive the public of honest services. Count seven charges Foster with attempted extortion under color of official right. If convicted, Foster faces a maximum penalty of 20 years in federal prison, per count. The indictment also notifies Foster that the United States intends to forfeit $7,400 and a Samsung Television, which are alleged to be traceable to proceeds of the offense.

Foster was first arrested pursuant to a federal complaint on June 8, 2011. According to the charging documents, Foster, who worked as a detective for the St. Petersburg Police Department (“SPPD”), told one of his sources that he would contact state authorities involved in the source’s state criminal cases to provide positive information about the source in exchange for Foster’s personal receipt of cash and property payments. Sometime thereafter, Foster and the source met so that Foster could secure cash and property payments from the source. According to the indictment, Foster sent and received text messages to coordinate the meetings with the source.

The indictment also alleges that Foster contacted state authorities involved with the source’s state criminal cases, identified himself as a detective with the SPPD, and provided positive information about the source’s involvement in various SPPD investigations. The indictment further alleges that Foster caused other SPPD officials to also contact state authorities on behalf of the source.

An indictment is merely a formal charge that a defendant has committed a violation of the federal criminal laws, and every defendant is presumed innocent unless, and until, proven guilty.

This case was investigated by the Federal Bureau of Investigation. It will be prosecuted by Assistant United States Attorney Jay G. Trezevant.”

To find additional federal criminal news, please read The Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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