Goldman Sachs must pay software coder's legal fees, court rules

Sergey Aleynikov is fighting a second case alleging that he stole Goldman Sachs' code

Goldman Sachs must pay the legal fees of a software engineer facing New York state charges that he allegedly stole the firm's proprietary source code, a federal judge ruled.

Sergey Aleynikov, who worked for Goldman from 2007 through 2009, sought an advancement of legal fees to fight two felony charges filed in August by Manhattan's District Attorney's office.

Aleynikov, who has maintained he only transferred open-source code, is charged in New York County Criminal Court with unlawful use of secret scientific material and duplication of computer-related material.

In a 34-page ruling filed on Tuesday, U.S. District Judge Kevin McNulty found that Aleynikov's former title of "vice president" was sufficient to qualify him as an officer of the bank, and Goldman's bylaws would require it to pay his fees.

Goldman Sachs argued that "vice president" is a courtesy title and doesn't qualify an employee as an officer. In a separate issue, McNulty postponed a decision on Aleynikov's request for Goldman to pay legal costs for his federal criminal case.

Legal fees for his federal court case were US$2.3 million, said Aleynikov's attorney, Kevin Marino, via email. His state case has cost $700,000 so far.

"Advancing his fees is a down payment on what they owe him for trying to ruin his life," Marino wrote.

Aleynikov has taken a strange path through the courts. In the first criminal case against him, federal prosecutors alleged he uploaded proprietary code for the company's high-frequency trading (HFT) system to a computer server in Germany on his last work day at Goldman on June 5, 2009.

He was convicted of violating the National Stolen Property Act (NSPA) and the Economic Espionage Act (EEA) after a jury trial in U.S. District Court for the Southern District of New York and sentenced to 97 months in prison.

But in April 2012, the Second Circuit Court of Appeals found those acts did not actually apply to Aleynikov's actions and set him free.

New York state prosecutors then took up his case, charging him in August under different laws but for the same actions, apparently avoiding a conflict with the U.S. Constitution's Fifth Amendment protection against being tried twice for the same crime.

Marino wrote that Goldman Sachs has provoked two prosecutions of Aleynikov, "essentially arrogating the power to conduct a private prosecution on the public's dime for crimes he did not commit."

Send news tips and comments to jeremy_kirk@idg.com. Follow me on Twitter: @jeremy_kirk

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