A former Goldman Sachs programmer, Sergey Aleynikov, is suing the FBI, alleging the law enforcement agency carried out a malicious, unconstitutional prosecution to please the powerful financial firm. The case will explore the bank and investment firm’s close relationship with the U.S. government, and whether those close ties grant Sachs privileged — and illegal — services in the criminal justice system.
Bloomberg News reports that the FBI arrested Sergey Aleynikov, a 45-year-old Russian programmer, when he was getting off the plane at Newark airport in 2009. He was charged with stealing Goldman Sachs’ programming code for high-frequency trading.
Aleynikov had recently left Sachs to join trading startup Teza Technologies, LLC, a firm that could have likely profited from the stolen code.
In December, 2010, a federal court in New York found Aleynikov guilty and sentenced him to eight years in prison. The sentence didn’t last. An appeals court overturned the verdict, saying that it did not fit the definitions in the laws he was charged under.
The FBI wasn’t finished with the former Sachs employee and is pursuing similar charges based on state laws. Aleynikov is taking action too, accusing the FBI of breaking the law to make Goldman Sachs happy according to the complaint filed in Newark, New Jersey.
“The unconstitutional malicious prosecution of Aleynikov was designed not to serve the interests of justice but to curry favor with an influential corporation intent on punishing one of its most talented officers who chose to leave the firm and, in the process, sending a message to other employees and prospective employees that Goldman Sachs is willing and able to use the American criminal justice system as its own private enforcement arm.”
New York State Judge Ronald A. Zweibel ruled that the FBI did violate Aleynikov’s fourth amendment rights and destroyed the evidence they obtained against him — including a computer hard drive containing the stolen code — an act that will likely put the prosecution in a difficult place and help the Russian programmer’s lawsuit.
Still, the complaint goes further than just suing the FBI for violating constitutional rights. It accuses its agents of conspiring to satisfy a private corporation. Is that possible?
The Russian programmer has not shown hard evidence, but Goldman Sachs certainly has enough former employees in government to make the possibility seem less far-fetched. The New York Times once called Goldman’s revolving door policy for employees entering government positions “Government Sachs.” Members of Congress, high-level bureaucrats, even Chicago Mayor Rahm Emanuel once received paychecks from the international firm.
Goldman’s influence seemed to be hard at work when less than a year after the appeal, Congress changed the laws so that future Aleynikovs will be punished.
According to Business Insider, the charges were under the National Stolen Property Act and Economic Espionage Act. The appeals judge threw out the case, saying the FBI charges didn’t fit with the statutes because the code didn’t match the description of a “stolen good,” nor was it related to foreign or interstate commerce.
The Congressional record shows that then Congress passed the Theft of Trade Secrets Clarification Act of 2012, ensuring that the laws would work to Goldman Sachs’ benefit in the future.
It will be interesting to watch the lawsuit go forward, and see if the Russian programmer holds any evidence that may hurt Goldman Sachs in the long run.
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