Goldman Sachs Ordered To Pay Huge Legal Fees Of A Guy Who Allegedly Stole From The Bank
Now, in an ironic twist, a judge has ordered Goldman to pay some of Aleynikov's legal fees since he was technically an employee of the bank when he allegedly stole the code, The New York Times' Peter Lattman reports. The bank's bylaws say it has to pay the lawyer fees of employees charged in connection with their roles as officers at Goldman, and
Aleynikov had the title of "vice president."
"Goldman may understandably find the result galling; it believes that Aleynikov has stolen its property," Judge Kevin McNulty wrote. "If there is any comfort, it may lie in the fact that Goldman has also indemnified and advanced fees in cases where the conduct was alleged to be unlawful and, in the broader sense, no less harmful to Goldman."
The case of Sergey Aleynikov is truly bizarre. The father of three was found guilty of stealing computer source code for high-frequency trading in 2010 and sentenced to eight years in federal prison. In 2012 the Second Circuit Court of Appeals overturned that conviction, finding the federal government was wrong to prosecute him under espionage laws.
He was arrested again less than six months later after Manhattan District Attorney Cyrus Vance charged him with state crimes related to the very same stolen code. He was freed on bail and is currently fighting the state charges.
Michael Lewis laid out the complicated case against Aleynikov in an excellent Vanity Fair article last month. In 2009, while he was working for Goldman, he got an offer to launch a trading platform for a new hedge fund. He jumped on it but agreed to remain at Goldman for six weeks.
Four times during that period, he sent himself source code he'd been working on - open source code available to the general public mixed in with code that was Goldman's property, according to Lewis. He later told FBI agents that he planned to separate the codes later, and that he needed to keep the open source code so he would know how to replicate it in the future.
Aleynikov knew what he was doing wasn't technically allowed, but he told Lewis it felt like "speeding in the car."
After serving more than a year in prison for his infraction, Aleynikov has to contend with the Manhattan DA. Usually, you can't be charged with the same crime twice (a practice known as "double jeopardy"), but the DA was able to get around that issue by charging him with state-law violations.
Judge McNulty is forcing Goldman to advance him fees necessary to fight the state case, the New York Times reported. That amount is already more than $700,000. In another ironic twist, Goldman has to pay Aleynikov for "reasonable fees" he incurred while fighting the dispute over legal fees - that's $1.1 million, an amount that Goldman can dispute.
The judge also said there should be further inquiry into whether Goldman has to pay its former programmer back for the $2.3 million he spent fighting the federal case.
All told, Goldman could end up paying $4 million to the lawyers who fought the case it asked prosecutors to bring in the first place.