Prosecutors keep trying to ensure that Sergey Aleynikov is treated as a criminal for allegedly attempting to convey to his new employers some computer code on which he had worked for his prior employers. The whole thing gives off a bad odor, as prosecutors seem to be fetching water for Goldman Sachs. Still, it has its amusing moments, and some of the recent amusement recalls a 1992 movie starring Joe Pesci.
Most readers of AllAboutAlpha will remember that in 2009 Aleynikov tried to leave Goldman and go to work at Teza Technologies. He may have been planning to bring proprietary code along with him to his new bosses. He was arrested by agents of the Federal Bureau of Investigation and prosecuted on that basis, and the prosecution won at the trial level. Aleynikov was convicted in December 2010 and imprisoned the following March.
But the wheel of fortune turned. In February 2012 a three-judge panel of the Second Circuit Court of Appeals said that the code in question had never been in the “stream of commerce” among states, thus the statutes under which the charge was brought simply did not apply. The appeals judges made Aleynikov a free man.
Key Language and a Second Arrest
The key language in the Economic Espionage Act allows for the conviction of anyone who “with intent to convert a trade secret, that is related to or included in a product that is produced for or placed in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof [emphases added].” Since the Goldman Sachs code in question was for in-house use, it had not either been produced for nor had it been placed in the stream of commerce when Aleynikov did whatever exactly he did with it.
Only months after Aleynikov walked out of prison, the office of the New York County District Attorney, Cyrus Vance Jr., charged him again. He was re-arrested under state law, but based on the same conduct.
All of that is history. The news these days is the degree to which the state prosecution suffers from snake bite. In June 2014, a judge excluded much of the evidence the prosecutors had hoped to use, saying in effect that they can’t just re-use the evidence the Feds had employed in the first case, because that evidence was gathered pursuant to what the appeals court later found was a “mistake of law.” Thus, the Federal Bureau of Investigation had possessed no probable cause to arrest Aleynikov, or to search him or his home, and the evidence arising out of all of that is verboten.
Trial by Ambush Isn’t Allowed
The exclusion of so much evidence was bad enough, but things got even worse for Vance and company. The trial was supposed to begin on Wednesday, April 1, 2015. The prosecutors clearly were not ready for it to start that day, and they asked the presiding judge, Justice Daniel P. Conviser, to delay it until the summer. He refused. Then they asked him to delay it until April 20th. Again, he refused. All he gave them was half a week: they had to be ready to start by Monday, April 6th.
The trial has gotten underway, but the embarrassments for the prosecutors have yet to end. On Tuesday, April 14th, Vance’s office tried to put an expert witness on the stand. Their computer-forensics expert was supposed to testify about his analysis of the information found on Aleynikov’s home computers.
The problem? This is where cousin Vinnie comes in. A party seeking to employ an expert witness is supposed to let the other side know who the expert is, in advance of trial. This gives the other side a chance to check into the witness’s education, background, etc., and prepare a proper line of cross.
Fans of the movie will recall that Vinnie took the prosecutor hunting to try to get a look at his files. That wasn’t necessary. It turns out that all Vinnie had to do was to ask. Prosecutors aren’t supposed to keep secrets.
To be fair, Vance might not have been trying to keep his expert a secret at all. Someone in his office may simply have gotten an “F” in doing the proper paperwork on time. Regardless: the defense had no notice of the forthcoming testimony of this expert, Spencer Lynch, they objected, and Justice Conviser kept Lynch off the stand.
There are serious issues bound up with the long legal travails of Mr. Aleynikov. But the whole mater seems to be descending into the realm of farce. Eventually the trial may turn on the issue of how long it takes to prepare grits.