Ex-Goldman Sachs Programmer Gets Some Evidence Thrown Out

Jun 20, 2014 2:34 pm ET

(Updates with lawyer’s comment in sixth paragraph.)

June 20 (Bloomberg) -- The former Goldman Sachs Group Inc. computer programmer accused of stealing thousands of lines of high-frequency trading code on his last day of work shouldn’t have been arrested and some of the FBI’s evidence can’t be used against him under a judge’s ruling.

Sergey Aleynikov, a naturalized U.S. citizen born in Russia, is accused of trying to steal the source code, which enables high-speed trades. Aleynikov was charged in state court after his federal conviction was overturned.

New York State Supreme Court Justice Ronald Zweibel in Manhattan today ruled that Aleynikov’s arrest on July 3, 2009, and a subsequent search of his home were “presumptively unreasonable.” The judge said the Federal Bureau of Investigation didn’t get warrants and that Special Agent Michael McSwain made a “mistake of law” in charging him with two federal crimes.

Physical evidence seized after Aleynikov’s arrest can’t be used at his trial, Zweibel said. He also barred prosecutors from using Aleynikov’s statements to FBI agents after his arrest at Newark Liberty International Airport in New Jersey. The judge denied Aleynikov’s request to exclude subsequent statements made at FBI headquarters in New York, saying they were made voluntarily and that he was advised of his rights.

Agent’s Actions

“While defendant was illegally arrested because of a mistake of law, agent McSwain did not deliberately act in bad faith,” Zweibel said in his ruling. “This is not a case where Agent McSwain resorted to mental, physical or emotional coercion to obtain defendant’s confession.”

Kevin Marino, Aleynikov’s lawyer, said in a statement that the ruling guts the case against his client and is “another important step on Sergey Aleynikov’s long journey to complete vindication.”

The decision “represents a damning indictment of those assistant U.S. attorneys, assistant district attorneys and FBI agents who have now twice pursued an unlawful prosecution of an innocent man at the behest of Wall Street giant Goldman Sachs -- and indeed, of Goldman itself, which not only provoked but has been an active co-conspirator in the government’s case against Mr. Aleynikov,” Marino said.

Benjamin Petok, a spokesman for the Manhattan District Attorney’s Office, declined to immediately comment on the ruling. Michael DuVally, a spokesman for New York-based Goldman Sachs, didn’t immediately respond to an e-mail seeking comment on the ruling or Marino’s statement.

Conviction Overturned

Aleynikov was found guilty of stealing code by a federal jury in Manhattan in December 2010 and was sentenced in March 2011 to eight years and one month in prison, serving about a year before a U.S. appeals court reversed his conviction and ordered him freed in February 2012. He was charged by Manhattan District Attorney Cyrus Vance’s office six months later. He has pleaded not guilty.

Zweibel in April denied a bid by Aleynikov to have the state charges thrown out on double-jeopardy grounds, saying the elements of the counts he faces are different than those he faced in federal court.

The case is New York v. Aleynikov, 04447-2012, New York State Supreme Court (Manhattan).