Did Goldman Sacs Overstep in criminally charging EX programmer

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William Snyder
9394
William Snyder  

To Sergey Aleynikov’s new way of thinking, every American could benefit from some time in jail, but in the event that you are yourself actually arrested and sent away, “there are certain practical aspects to keep in mind.” First, dress warmly. Detention centers tend to be freezing cold, even in summer, and so if you happen to be wearing shorts or short sleeves you’re in for a spectacularly unhappy night. Second, carry no cash. “If you have money, they charge you a convenience fee,” he explains. “If you don’t have it, they don’t charge you. The less money you have on you, the better.” Third, memorize a couple of emergency contact phone numbers. On the night of his first arrest he discovered he didn’t actually know his wife’s cell-phone number. He’d always phoned her by name from his cell phone’s address book, but his phone was one of the first things they’d taken from him.

The fourth, and final, rule was by far the most important: Don’t say a word to government officials. “The reason you don’t,” he says, “is that, if you do, they can place an agent on a witness stand and he can say anything.”

On the night of July 3, 2009, as he came off a flight from Chicago to Newark, New Jersey, he was totally unprepared, because he’d never imagined himself as the sort of person who might commit a crime. He worked too much and took only the vaguest interest in his fellow human beings, but, up to the moment of his arrest, Aleynikov had no sense that there was anything wrong with him or his situation. On the surface, his life had never been better: his third child had just been born, he had a new job at a hedge fund that paid him a million dollars a year, and he’d just moved into a big new house of his own design that he thought of as the perfect home. He’d come to America 20 years ago with little English and less money. Now he was living the dream.

For much of the flight from Chicago he’d slept. Leaving the plane he had noticed three men in dark suits, waiting in the alcove of the Jetway reserved for baby strollers and wheelchairs. They confirmed his identity, explained they were from the F.B.I., handcuffed him, and walled him off from the other passengers. This last act was no great feat. Serge was six feet tall but weighed roughly 130 pounds: to hide him you needed only to turn him sideways. He resisted none of these actions, but he was genuinely bewildered. The men in black refused to tell him his crime. He tried to figure it out. His first guess was that they’d gotten him mixed up with some other Sergey Aleynikov. Then it occurred to him that his new employer, the legendary high-frequency trader Misha Malyshev, might have done something shady. Wrong on both counts. It wasn’t until the plane had emptied and they’d escorted him into Newark Airport that they told him his crime: stealing computer code owned by Goldman Sachs.

The agent in charge of the case, Michael McSwain, was fairly new to law enforcement. Oddly enough, he’d been a currency trader on the Chicago Mercantile Exchange for 12 years. He’d ended his career on Wall Street the same year, 2007, that Serge was beginning his. McSwain marched Serge into a black town car and drove him to the F.B.I. building in Lower Manhattan. After making a show of stashing his gun outside, Serge says, McSwain led him into a tiny interrogation room, handcuffed him to a rod on the wall, and, finally, read him his Miranda rights.

Then he explained what he knew, or thought he knew: in April 2009, Serge had accepted a job at a new high-frequency-trading shop called Teza Technologies, but had remained at Goldman for the next six weeks, until June 5, during which time he sent himself, through a so-called “subversion repository,” 32 megabytes of source code from Goldman’s high-frequency stock-trading system. The Web site Serge had used (which has the word “subversion” in its name) as well as the location of its server (Germany) McSwain clearly found highly suspicious. He also seemed to think it significant that Serge had used a site not blocked by Goldman Sachs, even after Serge tried to explain to him that Goldman did not block any sites used by its programmers, but merely blocked its employees from porn and social-media sites and suchlike. Finally, the F.B.I. agent wanted him to admit that he had erased his “bash history”—that is, the commands he had typed into his own Goldman computer keyboard. Serge tried to explain why he had done this, but McSwain had no interest in his story. “The way he did it seemed nefarious,” the F.B.I. agent would later testify.

All of which was true, as far as it went, but, to Serge, that didn’t seem very far. “I thought it was like, crazy, really,” he says. “He was stringing these computer terms together in ways that made no sense. He didn’t seem to know anything about high-frequency trading or source code.” For instance, Serge had no idea where the “subversion repository” was physically located. It was just a place on the Internet used by developers to store the code they were working on. “The whole point of the Internet is to abstract the physical location of the server from its logical address.” To Serge, McSwain sounded like a man repeating phrases that he’d heard from others but that, to him, actually meant nothing. “There is a game in Russia called ‘Phone Book’ ” (like the American game Telephone), he says. “It felt like he was playing that.”

What Serge did not yet know was that Goldman had discovered his downloads just a few days earlier, months after he’d made the first of them. They’d called the F.B.I. in haste, just two days before, and then put their agent through what amounted to a crash course on high-frequency trading and computer programming. McSwain later conceded that he didn’t seek out independent expert advice to study the code Serge Aleynikov had taken. (“I relied on statements from Goldman employees.”) He himself had no idea of the value of the stolen code (“Representatives of Goldman told me it was worth a lot of money”) or if any of it was actually all that special (he based his belief that the code contained trade secrets on “representations made by members of Goldman Sachs”). The agent noted that the Goldman files were on both the personal computer and the thumb drive he’d taken from Serge at Newark Airport. (But virtually none of those files had been opened. If they were so important, why hadn’t Serge looked at them in the month since he’d left Goldman?) The F.B.I.’s investigation before the arrest consisted of trusting Goldman’s explanation of some extremely complicated stuff, and 48 hours after Goldman called the F.B.I., Serge was arrested.

On the night of the arrest—without an arrest warrant—Serge waived his right to call a lawyer. He phoned his wife and told her what had happened and that a bunch of F.B.I. agents were on the way to their home to seize their computers, and to please let them in—though they had no search warrant, either. Then he sat down and politely tried to clear up the F.B.I. agent’s confusion. “How could [the agent] figure out if this was a theft if he didn’t understand what was taken?” Serge recalls having asked himself. What he’d done, in his view, was trivial; what he stood accused of—violating both the Economic Espionage Act of 1996 and the National Stolen Property Act—did not sound trivial at all. Still, he thought, if the agent understood how computers and the high-frequency-trading business actually worked, the matter would be quickly cleared up. “The reason I was explaining it to him was to show that there was nothing there,” Serge says. “He was completely not interested in the content of what I am saying. He just kept saying to me, ‘If you tell me everything, I’ll talk to the judge, and he’ll go easy on you.’ It appeared they had a very strong bias from the very beginning. They had goals they wanted to fulfill. The goal was to obtain an immediate confession.” (The F.B.I. declined to comment on Aleynikov’s case.)

Full Story here part one Michael Lewis: Did Goldman Sachs Overstep in Criminally Charging Its Ex-Programmer? | Vanity Fair

techmac
2976
techmac  

Banks own our souls so they own everything. This is a new time

david mackay
2838
david mackay  

Rather than have the public know them for what they are, large banks want to impress the public that they have ethics and do only good things and are willing to sacrifice anyone and anything to make themselves look good. As you well know, Goldman is of strong influence with the United States government and their reach is far and wide, of course the FBI will do their bidding, Goldman has many highly placed former employees as members of the ruling group.

Taiwo Okunbanjo
1883
Taiwo Okunbanjo  

A lesson indeed..!!

The fourth, and final, rule was by far the most important: Don’t say a word to government officials. “The reason you don’t,” he says, “is that, if you do, they can place an agent on a witness stand and he can say anything.”

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