Tuesday, March 15, 2011, 3/15/2011 10:32:00 AM

Prosecutors Seeking Ten Year Sentence in Goldman Sachs Trade Secret Theft Case

By Todd

Having sucessfully prosecuted and obtained a conviction against Sergey Aleynikov, federal prosecutors are reportedly asking that he be sentenced to ten years in prison. The Wall Street Journal is reporting that sentencing litigation continues. "Aleynikov was simply a thief motivated by greed, someone who sought to benefit from the valuable intellectual property of his employer to make money for himself and his new company," Assistant U.S. Attorney Rebecca A. Rohr said in a court filing late last week.

In court papers, prosecutors said Mr. Aleynikov should be sentenced within a guidelines range of eight years and one month to 12 years and one month. Late last month, a federal judge ordered that Mr. Aleynikov be jailed pending sentencing after prosecutors contended he was an increased flight risk in part because of the lengthy sentence he faces and his connections to his family in the U.S. are strained. Mr. Aleynikov holds dual Russian and U.S. citizenship and is separated from his wife.

However, Kevin Marino, a lawyer for Mr. Aleynikov, said in a separate filing that Mr. Aleynikov should be sentenced to probation. In part, Mr. Marino argued that Mr. Aleynikov intended only to use portions of the downloaded code that were "open source," or freely available code.

The jury never heard evidence that Mr. Aleynikov stole the entire high-frequency trading platform or attempted to sell it to a competitor, Mr. Marino said. The evidence at most showed he intended to use the source code to make it easier for him to build a high-frequency platform, Mr. Marino said.

"Nevertheless, the government now seeks to have Aleynikov punished as though he had not only stolen Goldman's entire platform, as it originally claimed, but also had sold that platform to a Goldman competitor who used it to cause Goldman monetary damages of $20 million," Mr. Marino said. "That is simply not a fair reading of the jury's verdict."

Mr. Marino also said the consequences Mr. Aleynikov has already suffered should be a sufficient deterrent to others who might steal intellectual property, including "the loss of Mr. Aleynikov's job, the destruction of his reputation and the breakup of his family."

We'll report back once a sentence is rendered.


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