A month after leading Goldman Sachs programmer Sergei Aleynikov left the company in 2009, he was detained. Neither the FBI nor the jury seemed to fully understand what he did. Goldman Sachs accused him of stealing tens of megabytes of computer code, and the 41-year-old father of three received eight years in prison. This is the story of the confrontation between an ordinary workaholic and an accusatory machine.

On the night of July 3, 2009, Aleynikov was detained after a flight from Chicago to Newark. After leaving the plane, he noticed three men in black suits. They introduced themselves as FBI agents and, without disclosing the reason for the arrest, handcuffed him.

The programmer was at a loss and did not understand what crime he could have committed. Before that, he probably had the best period in his life: his third child had recently been born, he got an interesting job at a hedge fund that paid him a million dollars a year, his family moved to a new big house. Twenty years ago, he came to America from Russia with no money and poor English and achieved the American dream.

When he was detained, he did not resist. The first assumption was that he was confused with another Sergei Aleynikov. Then it occurred to him that his new employer, the famous HFT trader Misha Malyshev, had done something illegal. But he was wrong. At Newark Airport he was told that he had stolen computer code belonging to Goldman Sachs (hereinafter GS).
The inexperienced FBI agent who met him, Michael McSwain, had previously been a currency trader at CME for 12 years. He ended his career on Wall Street in the same year, 2007, when Sergei began his. McSwain put Aleynikov in a black car and drove him to the FBI building in Lower Manhattan. There, Michael led him into a small interrogation room, handcuffed him to a wall pipe, and read him his rights.
He then explained the investigation's version: in April 2009, Sergei agreed to a new job at the HFT company Teza Technologies, but before that he transferred matters to Goldman for six weeks. During this period, he sent himself 32 megabytes of source code via a Subversion repository with a server in Germany. The site that the Russian programmer used, as well as its location, seemed very suspicious to McSwain. Sergey had no idea where the server of this repository was located. He simply found it through a Google search as it was a popular service used by developers all over the world to store code.

In addition, the agent considered it very important that Aleynikov used a site that was not blocked by Goldman Sachs. Sergei tried to explain to him that the company closed only porn sites and social networks to programmers. The FBI agent wanted the defendant to admit that he had erased his bash history (the commands he entered via the keyboard into the GS). Sergei tried to explain why he did this, but McSwain was not very interested. “The way he did it seemed heinous to me,” an FBI agent later said.

Everything that the agent told Sergei was essentially true, but he did not understand what was to blame. "I thought it was kind of crazy," he says. “FBI officers listed computer terms in such a way that they made no sense. They didn't know anything about HFT or source code." McSwain was simply repeating memorized phrases that he had heard others say, without understanding what they were talking about. “In Russia there is a game called “damaged phone”; I think he was playing it at that moment,” recalls Sergei.

On the night of Sergei’s arrest, he did not immediately call his lawyer, but dialed his wife’s number and told her what happened. In addition, he asked his wife to hand over his computers to the FBI agents, although they did not have a search warrant or a warrant for his arrest.

He tried to politely ask the FBI official, “How can you figure out what was stolen if you have no idea what it is?” Sergei thought that if the agent understood how computers and HFT work, everything would become clearer. “I wanted to prove to him that there was nothing interesting there,” says Sergei. But the agent did not want to understand him at all. He simply continued to tell Aleynikov: “Everything you say will be used against you in court.” It seemed to Sergei that the FBI's task was to put him in prison by quickly obtaining a confession.

The main obstacle along the way was that the FBI did not understand what he had to confess to. “In the written statement they made obvious mistakes in computer terms. And I tried to correct them,” recalls Sergei. However, at 1:43 a.m., after five hours of interrogation, McSwain sent an e-mail to the prosecutor's office: “Wow! He signed a confession." Aleinikov signed the confession, having first crossed out the erroneous terms in the accusation. Two minutes later, the agent sent Sergei to jail. The prosecutor said he could not be released on bail because he poses a danger to society and could flee the country. In addition, he owns computer code that, in the wrong hands, will allow him to “manipulate the market in an unfair way.” Most likely, the prosecutor believed that Goldman Sachs was using it to manipulate the markets in a fairer way.

Subsequently, Aleynikov refused to speak to journalists and testify in court. His speech and appearance, reminiscent of a Russian spy, were not suitable for successful self-defense; he spoke well with other experts, but not with the general public, so his lawyer Kevin Marino advised him to remain silent. Sergei remained silent, even after he was sentenced to eight years without the possibility of parole.

Life in the USSR

Sergei Aleynikov did not want to immigrate to America, much less work on Wall Street. He left Russia in 1991, but more with sadness than hope. “When I was 19, I couldn’t imagine leaving the country. I was a patriot and even cried when Brezhnev died. I also always hated English and considered myself incapable of learning languages,” recalls Sergei.

The main problem in the USSR was that he was not allowed to learn programming, but he wanted to. The reason was his nationality; his passport stated that he was Jewish, so it was very difficult for him to enter the university. Sergei was able to touch a computer in 1986, when he was 16 years old. His first program was a sine wave graph. When the computer executed the code, the guy was amazed and realized that this was his calling. He was involved in programming not only intellectually, but also emotionally. “Writing a program is like giving birth to a child. This is creativity. It may be technical, but it is a work of art. You get satisfaction from it,” he says.

Sergei wanted to apply his knowledge of mathematics and computer science, but the current system did not give him this. “I had to come to terms with the idea that the USSR was not the best place for me,” Mr. Aleynikov says.

He arrived in New York in 1991, after the collapse of the Soviet Union. His first refuge was a room on 92nd Street, where he was sheltered by the Jewish YMCA. He was amazed at the new city by the many different people on the streets and the fantastic selection of products in the stores. He photographed the rows selling sausage and sent the photo to his mother in Moscow. "I've never seen so much sausage," he says. True, later he chose vegetarianism.

Aleinikov came to America without money or real ideas on how to get it. He tried to get a job. “It was quite nerve-wracking. I didn't speak good English, and a resume was a foreign concept to me,” he says. At the first interview, he was asked to tell about himself. “For the Soviet mentality, this question meant naming the place of birth and relatives,” he explains. Sergei could only talk about his family and nothing more. But he had a good programming ability, and soon found work in the office of a medical center in New Jersey for $8.75 an hour. He later got a job in the computer science department at Rutgers, where he was given a scholarship to pursue a master's degree. He then worked for Internet startups for several years until, in 1998, he received an offer from the New Jersey telecom giant IDT. Over the next decade, Aleynikov developed systems and wrote code to route millions of telephone connections, helping to reduce costs and increase speeds. When he joined the company, it had 500 employees, and by 2006 there were already 5 thousand, and he was its IT star. That year, he received a call from a recruiting agency who told him that Wall Street was interested in his specific programming skills.
$270 thousand per eaten fly

Sergei was uncommunicative. Although he had a circle of acquaintances from Russia, he was most interested in working with code. Therefore, before the recruiter told him about Wall Street, Sergei didn’t know much about this financial street. They sent him a bunch of books about finance and software used in this area. He was also told that he would be able to earn much more than the $220 thousand a year that he was receiving at the time. Sergei started reading a couple of books, but then decided that it was not for him. He worked for the benefit of the telecom sector and did not need large incomes. A year later, he received a call from the recruitment agency again. Sergei's wife, a sweet Russian immigrant named Elina, was carrying their third child, and they needed to move out of their two-room house. In addition, in 2007, IDT was in a difficult financial situation, so Aleinikov agreed.

Goldman Sachs conducted a series of telephone interviews with him, and then invited him for a full day of live interviews. Sergei found this burdensome and strange. "I've never seen people put so much energy into judging others," he says. A dozen Goldman Sachs employees tested him one by one with computer puzzles, math problems and even physics questions. After this, it became clear to Goldman employees that he knew more than they were asking him. Then he was invited to come the next day. He went home thinking that he didn't want to work at Goldman Sachs. “But the next morning the competitive spirit woke up in me. I realized that this is a competition and I have to pass it,” he says.

The next round of interviews ended with a meeting with one of the Russian HFT traders - Alexander Davydovich. He was the managing director and he had two maths questions. The first question was: “Is 3599 a prime number?” Sergei thought that 3599 was very close to 3600. He wrote down the following equation: 3599 = 3600 – 1 = 602 – 12 = (60 – 1) (60 + 1) = 59 ´ 61. That is, 3599 is not a prime number. Aleinikov found the answer in about two minutes.

The second question turned out to be more difficult. Alexander invited Sergei to imagine a rectangular room and reported all three of its dimensions. “He said that there was a spider sitting on the floor of the room and gave its coordinates. There was also a fly on the ceiling, its coordinates were also known. Davydovich asked to calculate the shortest path from a spider to a fly,” says Aleinikov. The shortest path between objects is a straight line, but the spider cannot fly, it can only crawl on the surface. And then Sergei realized that he needed to turn the three-dimensional room into a one-dimensional surface, and then calculate the distance using the Pythagorean theorem.

It also took him only a couple of minutes to solve this problem. After “catching a fly,” Davydovich offered him a job with a salary of $270 thousand a year.

Holding an elephant

Aleinikov was amazed that he fit perfectly into the company: half of Goldman Sachs’ programmers were Russian. Russians had a reputation for being the best on Wall Street, and Sergei knew why: they had to learn to program without being in front of a computer all the time. “The time spent working on a computer for programmers from the USSR was measured in minutes. When you write a program, you are given a tiny window of time to make it work. Consequently, we wrote the code in such a way as to minimize debugging time. I had to think a lot about how best to implement the algorithm before writing it down on paper. Now the availability of computer time allows you to write and erase an idea ten times,” says Aleinikov.

He joined GS at an interesting time. By mid-2007, the investment bank's bond trading desk was one of the culprits in the global financial crisis, helping the Greek government disguise its debt book while issuing sub-prime mortgage securities and betting against them.
At the same time, exchanges and various dark pools proliferated, on which the same assets were traded, which provided the opportunity for arbitrage. Much of the new trading was generated not by old-fashioned investors, but by extremely fast robots from HFT firms like Getco and Citadel, as well as the HFT divisions of big banks like Goldman Sachs. According to experts, algorithms suck about $20 billion from the market. The exact figure is unknown, since high-frequency firms are not required to disclose their income. But when Citadel offered high-frequency trader Misha Malyshev $75 million and he walked away anyway, that says a lot.

The combination of new regulations and technology has manifested itself in the robot war. The faster the robots, the more chances to earn money. In 2008, Goldman Sachs decided to make billions from them. Before this, the high-frequency division of GS earned only $300 million. Compared to the fact that the similar division of Citadel received $1.2 billion, GS was not even in the Top 10, which saddened management.

Goldman Sachs HFT robots were slow. Aleinikov had to increase the speed of the systems. According to Sergei, the GS system was a mixture of code from different programmers, and its writing in IDT was much better organized. GS bought the core of its system nine years ago from Hull Trading. The unwieldy system had a huge amount of old software and nine years of various fixes hanging over it. According to Sergei's calculations, it contained more than 60 million lines of code. Initially, he was supposed to monitor the health of this system.

One small example of his work: in New Jersey, an investment bank bought a building opposite Nasdaq, which was supposed to ensure fast trading, but this did not help. Aleinikov was instructed to increase the transmission speed. When he arrived, 40 thousand messages were passing back and forth in a second. When he tested the system, the signal from GS to Nasdaq took 5 milliseconds. For other HFTs, during this time period the signal goes from Chicago to New York. Of course, this speed did not suit anyone, and Sergei began to look for reasons. The equipment was checked, as good HFT companies change it every couple of months. But the culprit turned out to be clunky GS software. The high-frequency trading platform was designed in typical Goldman style: every signal sent had to pass through a mother server in Manhattan before being sent back to the market. “In fact, the reason for the delay was not the distance, but the fact that there were layers of corporate switching equipment in the signal path,” says Sergey.

After several months of work, Aleinikov came to the conclusion that the best thing that could be done was to completely demolish the old high-frequency platform and build a new one. But the management did not want to change the equipment; he needed profit here and now. “They were not interested in anything long-term, they wanted everything at once,” says Aleinikov. “But constantly tweaking the existing system has made it look like an elephant that is difficult to contain.” In fact, for two years at GS he “supported the elephant.”

Dishonest Goldman

Aleinikov considered trading a game of chance for gamblers and preferred the calm world of programming to him. He wasn't friends with the Goldman traders. But he knew they were obsessed with speed, and he created for them what they wanted. “It wasn't entirely clear to me whether we would have an advantage if we slowed down by half a millisecond,” he says.

He changed how algorithms work at Goldman along IDT principles: he decentralized the system. Previously, signals from various exchanges arrived at a single center, but now each exchange had its own mini-center. But most of the time was spent updating old code. To do this, he and other GS programmers resorted to open source code, available to everyone. These tools and components were not intended specifically for financial markets, but could be adapted to modernize GS systems. Sergei soon discovered that Goldman Sachs had taken a huge amount of free software online but did not return it after modifying it, even when the modification was minor and not used for financial purposes. “I took freely available components, packaged them and made it possible for two computers to work as one. If one computer has problems, the second one intercepts the tasks and starts working for it,” says Aleynikov. Sergei approached his boss Adam Shlesinger and asked if he could put his work back into open source. “He said that this is now the property of Goldman Sachs,” Aleinikov recalls. “He was very tense when I mentioned it.” Aleinikov could not understand how one could behave so selfishly: use the code of others and give nothing in return.

Competition was cultivated at GS: everyone tried to show how great their personal contribution was, since teams did not receive a bonus. This approach was not conducive to good programming because it is a team task. Communication between employees was minimal - in contrast to the telecom sector, where there was interaction between people and programmers were more relaxed. At Goldman, according to Aleinikov, it was like this: “Something has broken there, and we are losing money. Fix it now." The programmers assigned to fix the problem did not talk to each other. “When two people wanted to talk, they went to an empty office,” says Sergei.

Aleynikov was unaware of his reputation: he was known as the best programmer at Goldman Sachs. “There were only twenty people on Wall Street who could do what Sergei could do. And he was one of the best, if not the best,” says one of the headhunters.

At Goldman, programmers usually don't know their worth. They are separated from the traders and therefore do not see the numbers, do not know the amounts that are earned using their algorithms. This did not interest Sergei. UBS made him an offer, promising to raise his salary to $400 thousand, but he did not want to go to another firm on Wall Street. But in early 2009, he received an offer to create a trading platform for a hedge fund created by 39-year-old Russian Misha Malyshev.

The prospect of creating a new platform rather than fixing the old one interested him. In addition, they were ready to pay him more than a million dollars a year, and they offered to open an office near his home in New Jersey. He agreed and told Goldman he was leaving. The executives asked him what they could do to get him to stay. “They tried to discuss wages,” says the programmer. “I told them it wasn’t about the money.” This was a chance to build a new system from scratch. While at IDT I actually saw the results of my work, at Goldman there was this monstrous system. I had the feeling that no one in the company knew how the entire system worked.”

GS management asked him to train his replacements for six weeks. Four times in those six weeks he sent the source code for the system he was working on. He would later be accused of sending 32 megabytes of code. These files contained both open code and modified code already owned by Goldman Sachs. As he later tried to explain to FBI agents, he hoped to separate one from the other so he could remember how he had changed the open source code. He sent these files in the same way as he had done every week since the first month of work. “Nobody ever said a word to me about this,” explains the programmer.

He simply opened a browser and copied the code into the free Subversion repository, then he did what he always does: deleted his bash history (commands to the system. Bash is the shell on many Linux distributions, including Fedora, Ubuntu, Redhat). If he wanted to remain undetected, he could have come up with something more clever. “I knew they might not be happy. I felt like I was speeding a little in the car,” he says.

Sleeping jury and a weird professor

Aleinikov's trial lasted ten days and was attended by few professionals. The world of high-frequency trading is small, so there are unlikely to be those who are interested in wandering around the courts. Those present did not understand HFT trading at all. At the trial was Illinois Institute of Technology professor Benjamin Van Vliet, who cannot be called a professional in high-frequency trading. He was misinformed about this market and called Goldman Sachs - New York Yankees in HFT, although this is not entirely true.

The jury consisted mostly of high school graduates with no programming experience. Misha Malyshev, who was subpoenaed as a witness, said that the Goldman Sachs code was useless in the system that Sergei was supposed to build. Misha insisted that he never wanted to import the code because he wanted to build his Teza system from scratch. “Even if I were offered Goldman's entire high-frequency trading platform, I wouldn't be interested,” Misha said, but when he looked at the jury, half of them seemed to be asleep. “If I were a juror and not a programmer, it would be very difficult for me to understand what I did,” says Aleynikov.

Goldman Sachs' role in the trial was to make it even more difficult to understand. The investment bank witnesses acted as if they wanted prosecution rather than being independent. “It’s not that they were lying,” says Sergei. “But they said things that they didn’t understand.” When Adam Schlesinger was asked about the code, he simply said that it was all proprietary to Goldman. I wouldn't say he was lying, but he was misunderstood."

There were no professionals at the trial who understood anything about the HFT business, and the FBI did not resort to their help. “They would bring my computer into the courtroom, take out the hard drive and show it to the jury as evidence!” - says Mr. Aleinikov.

HFT court

After the actual meeting, a kind of second HFT court was assembled in a separate room of the restaurant. Well-known journalist Michael Lewis invited half a dozen people who were familiar with Goldman Sachs, high-frequency trading and programming as jurors.

The story that Aleynikov only needed publicly available code, which the FBI found unconvincing, seemed logical to the jury. Since Goldman did not allow him to put an improved version of the open source code online, the only way to take it was to copy the investment bank's code. The fact that some of the code that belonged to GS was included there did not surprise anyone. This code was written only for their platform, so it would not be useful to anyone outside. The two small pieces of code he used in the new Teza platform had public licenses. “It really would have been easier for him to write a new platform from scratch,” one juror said. Everyone agreed that Goldman's code would hardly have been useful to him to create a new system.

But Aleynikov surprised the HFT jurors with his answers. They were very surprised that he sent codes from the GS servers weekly and no one at the company told him anything. “At Citadel, if you put a flash drive into your work computer, within five minutes someone will be standing next to you saying, 'Dude, what the hell are you doing?'” said one meeting participant. They were also surprised at how little he copied: eight megabytes in a platform that consisted of one gigabyte of code. But what surprised the jury most was that he had access to all the strategies, but did not take any, meaning he did not steal the robots. He didn't find it interesting.

The real mystery is not why Sergei sent the code, but why Goldman Sachs and the FBI were so insistent on putting him away. They trained employees to give the necessary testimony so that the programmer received a longer sentence, and the FBI did not try to understand the issue.

Perhaps Goldman Sachs managers feared for their own bonuses. By imprisoning a former programmer for stealing “important, important” secrets, they showed management that they were doing “important, important” things. Additionally, they may qualify for additional annual bonuses for “preventing code leaks.” At the meeting, everyone tried to understand why Sergei was so calm. He seemed to be happy with what was happening, and it could not be assumed that he had lost his home, his job, his wife and his savings. One of the people at the table stopped the conversation about machine code and asked, “Why aren’t you upset?” Sergei simply smiled in response. “No, really,” said another. - How do you stay so calm? I would have gone crazy by now.” He smiled again and said, “In a way, I'm glad this happened to me. I think it has improved my understanding of life."
Arrest again

After the accusations from GS and the FBI, Aleinikov withdrew into himself and thought about his place in this world. “When I was arrested, I couldn't sleep,” he says. - I saw articles in the newspaper and trembled for fear of losing my reputation. Now I just smile and don’t panic.” By the time Sergei was sent to prison, his wife had left him, taking away his house and money, and he had no one to support him. The prison in which Sergei spent the first four months contained the most brutal criminals. He was not afraid to be alone with them, and for the first time in his life he began to talk more.

After a year in prison, Sergei Aleynikov's appeal to the Second District Court of Appeal was heard. His lawyer Kevin Marino worked for him for free since Sergei was bankrupt. Marino's argument was that the laws under which he was accused did not actually apply to his case. At noon on February 17, 2012, Sergei was released.

A few months later, Marino noticed that Sergei’s passport had not been returned and called him. It turned out that he, who remained with friends in New Jersey, was arrested again, put in prison, and charges were being prepared against him again. He now faces four years in prison. A few days later, Manhattan District Attorney Cyrus Vance Jr. announced that the state of New York was charging Sergei Aleynikov with “the theft and duplication of complex computer code belonging to Goldman Sachs.” A press release from the prosecutor's office said the code was so confidential that the market referred to it as the company's "secret sauce."

Marino remembered where the phrase “secret sauce” came from. Sergei used this phrase in his testimony when he taunted prosecutors by calling the Goldman Sachs code the secret sauce. Aleinikov is now out on bail, and his case continues. Now he, too, has sued Goldman to recover legal fees. After his imprisonment, he said, he rethought his life and became happier than ever. For the first time in his life, he began to communicate with people, whereas previously he was only interested in computer code. Sergei is sure that prison is useful for every man: it helps to understand life, not depend on money, and learn to appreciate simple things, such as sunlight and the morning breeze.

Goldman Sachs response: “The company has spent millions of dollars and tens of thousands of hours developing the source code and technology of the business. The firm is trying to protect this valuable technology. The company limits access to its own technologies to those employees whose responsibilities include maintaining technology. When he left the company, he encrypted and sent 500 thousand lines to a server in Germany. Despite the fact that this file also contained open source code, a significant part was occupied by code that was the property of Goldman Sachs.

At the end of June, New York State Supreme Court Justice Ronald Zweibel ruled that federal prosecutors' materials, which the district attorney's office plans to use at the new trial, were excluded from Aleynikov's case. Sergei Aleynikov is accused for the second time of stealing program codes for the high-speed trading system of the investment bank Goldman Sachs, where he worked as a programmer.

The unexpected decision of an authoritative judge calls into question both the chances of the Manhattan District Attorney's Office and the very arrest of Aleynikov by FBI agents at Liberty International Airport in Newark on the night of July 3, 2009. On 71 pages of his decision, His Honor Zweibel, who has sat on the Supreme Court since 2001, explained why the FBI "did not have probable cause to arrest the defendant, let alone search him and his home." Judge Zvaibel considers Sergei Aleynikov’s arrest “illegal” and his “Fourth Amendment rights violated as a result of an error of law.” This amendment to the US Constitution guarantees "the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures."

Prior to this, Judge Zvaibel granted most of Aleynikov’s motions on the groundlessness of the evidence of his guilt. In particular, the judge removed from the case materials about several computers that FBI agents found in Aleynikov’s house, as well as about a laptop computer and a flash drive that he had with him at the time of his arrest at the airport. Statements Aleynikov made to FBI agents at the airport before he was given his Miranda rights were also removed from the case by the judge as “fruit of a poisonous tree.”

These decisions cut the ground of confidence from under the feet of the prosecutor's office, since the evidentiary base of the prosecution was built precisely on the files on the computers of the arrested Russian. “Judge Zweibel's decision is a devastating indictment of the federal lawsuit,” said attorney Kevin Marino. “We are confident that this decision is another important step on Sergei Aleynikov’s long path to final acquittal.”

This journey has been going on for almost four years, of which Russian and US citizen Sergei Aleynikov spent 11 months in the Manhattan federal prison MMS under number 90453-054. In Moscow, he graduated from the State University of Transport (in the old Soviet way - the Institute of Transport Engineers), then worked as an application developer at the Unified Information and Computer Center of Russian Railways.

I came to America in 1991 without a language, without money and without plans on how to earn it. Started in a medical office in New Jersey for $8.75 an hour; then he went to work at Rutgers University and graduated on a scholarship; lectured on the topic “Neuroelectric systems”; led teams of programmers in several start-up Internet companies (which are now called startups in Russian).

For eight years, Aleynikov headed a group of communication system developers at a large company IDT Corp., which sells prepaid telephone cards, then spent more than two years at Goldman Sachs, developing computer programs and technical support for the trading system.

During this time, Aleinikov married his compatriot Elena, who began to be called Elina, became the father of three children, became rich and bought a house in the elite village of North Caldwell in New Jersey near New York. According to Sergei's estimate five years ago, the house was worth $1.14 million, and the couple tried to sell their old house in Little Falls for half a million.

In one of his resumes, in the “interests” column, Aleinikov wrote “ballroom dancing” and proved this with a video posted on YouTube about how Sergey and Elina took first place in a ballroom dancing competition. In addition to this video, Sergei posted on YouTube a comic short film he shot, “Love Story,” about his matchmaking with Elena, with himself in the leading role.

At Goldman Sachs, Aleynikov received $400 thousand a year, but in 2009, the Chicago company Teza Technologies offered him three times more. The founder and owner of this company, Russian Misha Malyshev, was the son of a truck driver and a primary school teacher from the Ivanovo region, where the Teza River flows, after which he named his company.

In Moscow, Malyshev graduated from the prestigious MIPT - Institute of Physics and Technology, which in our academic circles is considered the “Russian MIT”. He and his wife, also a Phystech graduate, came to the USA in 1993 and six years later defended their doctorate at Princeton University in the field of plasma physics.

As the investigation established, after agreeing to go to Malyshev, Aleinikov copied more than 3.5 thousand files from the Goldman Sachs office computer. Having received the codes of the programs that this bank used in exchange trading, Aleynikov uploaded them to a server located in Germany and registered it in the name of Rupinder Singh living in London.

After Aleynikov's arrest, London police, at the request of the FBI, questioned Singh, and his server hard drives were temporarily seized. “And all because,” Singh wrote in his blog, “some idiot uploaded data to our service that he had no rights to.” Singh had never heard of Aleynikov, and Sergei, without pleading guilty, claimed that he copied office files so that he could work at home, and no one except him had access to them.

Aleinikov left Goldman Sachs of his own free will and on July 2, 2009, flew to Chicago for a meeting at Teza Technologies LLC, where he had already been accepted, and brought there his laptop computer, as well as a flash drive with recorded data. The next day he returned home and was arrested at the Newark airport along with his laptop and flash drive.

According to Sergei, FBI agent Michael McSwain drove him from the airport to the bureau's Manhattan office, where he was taken into a small interrogation room, handcuffed to a pipe and read his Miranda rights. Teza learned about his arrest on July 6, and Malyshev said that during the investigation, Sergei Aleynikov is considered to be on leave without pay. Then he was fired. Four days after his arrest, Aleynikov was released on bail of $750,000 and ordered to surrender both passports.

When questioned by the FBI, he said that he wanted to copy “open source”, that is, the open codes of Goldman Sachs, which he worked with, and accidentally copied closed ones, but federal prosecutors classified this as theft committed by an employee from an employer.

FBI investigators determined that Aleynikov copied 32 megabytes of data from his company's network and then erased traces of the copying. To do this, he wrote a program that copied, compressed and renamed files, and then uploaded them to a website in Germany, but Sergei did not take into account that Goldman Sachs was making backup copies and the security system signaled an intrusion.

The charges against Aleynikov threatened him with imprisonment for up to 25 years; he pleaded not guilty, and four days after his arrest he was released on bail of $750 thousand. At first, his government lawyer was Sabrina Shroff, who later in the same Manhattan court, also at first and also defended the Russian Viktor Bout for free. At a preliminary hearing in August 2010, she said prosecutors "may be under the wrong impression" because her client siphoned just 32 of Goldman Sachs' 1,024 megabytes of information.

Then Kevin Marino became Sergei's lawyer. The trial began on December 1, 10 days later the jury found Sergei Aleinikov guilty, and immediately after their verdict, Sergei Aleinikov was taken into custody, deciding that he could hide, since his wife Elina had left him, and nothing connected him with America anymore. On March 18, 2011, Judge Denzi Cote sentenced Aleynkov to 97 months in prison and a fine of 12.5 thousand dollars.

The conviction was appealed, and on February 16, 2012, the Federal Court of Appeals for the Second Circuit in Manhattan acquitted him, deciding that prosecutors had misapplied federal "corporate espionage" laws against Aleynikov. The next day, Judge Cote ordered his release from custody, but did not sign an acquittal.

The prosecutor's office said it would appeal the decision of the appeals court, but the next instance was the US Supreme Court, and federal prosecutors "fused" the case to their colleagues from the district attorney's office, although outwardly there was no hint of this. In August 2012, Manhattan District Attorney Cyrus Vance decided to consider the case of Sergei Aleynikov, but on the basis of New York state laws.

As his deputy, David Zachman, chief of the Cybercrime and Identity Theft Division, said at the time, “the appellate court clearly stated that what the defendant did could not be considered a crime under federal law because the evidence was insufficient, but suggested that it may have violated state law.” . Defense lawyer Kevin Marino said in court that his client fled Russia in search of freedom and justice, but instead received "Kafka and Goldman Sachs."

The case came to the Manhattan branch of the New York State Supreme Court, where Judge Ronald Zweibel was clearly hostile to it, although he refused to dismiss it. Having satisfied many of the requests of Aleynikov’s lawyer, the judge did not remove Sergei’s testimony to FBI agents on the day of his arrest. The judge ruled that although these statements "resulted from the defendant's unlawful arrest," Aleynikov gave them after waiving his right to an attorney.

Judge Zweibel also stipulated that "although the defendant was wrongfully arrested due to an error of law," the FBI "acted in bad faith but without malice." In the meantime, Ronald Zweibel decided that after the appeals court's decision to overturn the guilty verdict, "the defendant should have all his property returned."

As they joked in the former Soviet Union during the Brezhnev stagnation, “we were born to make Kafka come true.”

Sergey Frumkin

The book makes and substantiates an assumption: our world is made up not of matter and energy, but of a set of verbal and digital descriptions. And descriptions, in violation of all the laws of the material world, can be changed without applying physical force to them.

Two questions are raised. First: what if this truth is already known to some circle of people? And second: what can a person become who, from birth, ignores the system of material values ​​we are accustomed to?

PART ONE

Dedicated

Stas looked through the problem statement at the coffee can. Virtual pages with a ready-made solution “went” to the side, freeing up space for review and allowing eyes tired of moving pictures and multi-colored letters and numbers to rest.

For several hours now the young man had been sitting motionless on the sofa in his room. The parents left in the morning and deliberately were in no hurry to return, so as not to disturb their son at such an important moment in his life. Evening was falling outside the windows. The house was empty and quiet...

Stas had only one final point to make: confirm to the invisible arbiter that he was sending the task for verification. It was worth taking a breath, and then once again going through the solution scheme from beginning to end...

The young man reached for the jar standing on the table in front of him. You could brew the coffee yourself, but the street machines did no worse, and the disposable containers kept the temperature for another three hours after “opening.” Stas took a long sip, enjoying the tart aroma that hit his nose and the heat that brought him back to reality. I looked at the time - almost four hours had passed since the start of the exam. It seems that he managed it without any misfires. I tried to run through the sequence of completed tests in my memory - it was useless, in nervous tension the tasks were swallowed, completely erased by subsequent ones.

Well, what's done is done. Even this last problem about an oscillating pendulum should have been left as is. Well, they admit that the train of thought is not optimal, they take away a point - this will not affect the overall picture - more points, less points. It’s much more dangerous to mess things up by allowing doubts to develop into panic - then in a matter of minutes you can make such corrections that the devil himself won’t figure out where, what, why...

- All! – Taking another long sip of coffee, the young man made his final decision. Having looked for the pages that had been pushed to the bottom corner of his glasses, he “unfolded” them in front of him and announced to the test program: “The calculation is complete!” Then he resolutely disconnected from the Internet, took off his Netphone glasses from his eyes, threw them on the table and collapsed exhaustedly on the back of the sofa.

Now all that remained was to wait for the results... Stas pushed away the thought that required immediate action - it would be better for him not to fuel nervous tension. There is nothing to do on the Internet. He forbids himself to think, forbids himself to discuss his doubts with someone, forbids himself to make predictions. When they count the points, they will call you. When the auction on the university exchange ends, they will show up, find and congratulate...

Stas listened to his emotions. He felt no satisfaction. The test passed quickly, leaving an unpleasant aftertaste of some incompleteness. Now it seemed that five dozen questions on intuition, intelligence, logic and knowledge were clearly not enough to decide the fate of a person once and for all. Four years of intense daily work ended with a banal survey in which chance and luck played no less a role than the knowledge and talent of the future specialist in neuroprogramming and mathematical analysis...

However, it is quite natural that everything happened the way it happened. The interactive course ended with an interactive test. At home on the sofa Stas completed his training, at home on the sofa he passed the exam. Institutes in which “living” teachers gave lectures to “living” students are a thing of the past. Some programs, in accordance with the applicant’s abilities, helped him choose an educational institution, others, for a fee, opened the door to knowledge and skills.

Like his other peers, Stas was not tormented by the choice of a life path - at one time, after completing a basic (school) training course, he was recommended a university course as an analyst-programmer. When he turned to the university website, based on the results of the entrance tests, they advised him to complicate the task by choosing a “neuro” specialization. Stas’s consent cost him four years of study instead of two or three, as in parallel faculties, and his parents – a more significant amount requested for an “individual course of increased complexity.” But on the other hand, employment prospects were different for the better: there were few specialists in neuroprogramming, they were trained by single universities and only a few people a year, and the lack of specialists increased their prices.

“Price” in the literal sense of the word: upon completion of the training course, graduates were put up for auction - universities held auctions, inviting participation from all enterprises around the world interested in young personnel. Ten percent of the price for the lot was returned to the graduate, the rest ended up in the “bins” of the educational institution. Thus, where careerism, determination and the will to win did not work, banal financial interest was included. The student was interested in showing a high level of preparation at the final exam, and the university was interested in finding the most worthy (rich) employer for the graduate.

Studying in the chosen specialization cost Stas more, but they could return him more. Last year, so much was given for the “heads” of two older comrades - friends from the university forum - that Stas would not only return the money they lent to his parents, but also acquire good starting capital. And he had every reason to expect the same assessment: on the performance chart at the end of four years, the young man occupied a leading position.

Unfortunately, being a good student wasn’t enough to say “big money awaits me”—the graduation auction was an equation with many unknowns. The starting amount of the lot was determined by the student’s academic performance over four years, the grade he received on the final exam, and special achievements demonstrated in individual disciplines, and - most importantly - the market need.

How many customers will take part in the auction? What is more important for these people: speed of decision-making when answering questions, the ability to choose the most optimal calculation algorithm, elegance of logic, depth of thought, intuition, mental acuity? In one industry, patience and hard work were valued, in another - determination and speed of reaction, in the third - talent and the ability to create something new...

However, it was too late for him to think now. The roulette of fate was spinning - Stas could only cross his fingers for luck and humbly wait for the results. He promised his parents to replenish the family budget. He dreamed of working for a prosperous multinational corporation. He did everything he had to do. Nothing else depended on him...

Suddenly, the touching netphone started playing and made Stas jump up on the sofa and break away from the struggle with his thoughts.

- So fast? – the young man hastily covered his eyes with his glasses, wondering what could go against the standard scheme.

A message flashed in the air: “Exam passed.” No rating, no comments, no position on the list of distinguished students. And no information about employers. The glasses remained clean - Stas’s room was visible through the glass in the background. The young man did not even immediately understand that he was being asked to contact the dean of the faculty: the link was placed at the very bottom of the visible zone and did not insist on immediate activation.

Stas wanted to know the details - of course, he hastened to initiate contact with the university.

The dean appeared a second later - apparently he was waiting for the call, realizing that the student would not be able to cope with curiosity. The elderly professor was sitting at a table in a certain office that Stas had never been to and had never seen. The office could be both real and suggestible, the professor too. The time when you believed your eyes as yourself has sunk into oblivion...

- You wanted to see me? – to start with something, Stas asked.

A smile touched the dean's lips, but indifference remained in his eyes. The voice did not betray a single human feeling:

– I wanted to congratulate you. They did a brilliant job.

Stas once again thought that a person incapable of empathy needed to set facial expression correction in his personal settings - if not out of respect for the students, then at least out of politeness. Apparently, the dean - “a man of the old school” - did not bother himself with such nonsense.

- Did they check my ticket? – Stas doubted that they could manage it so quickly. The overall assessment was given by the test program - it took seconds. But the price of the lot was not determined by the arithmetic sum of points - people analyzed the price-quality ratio. And people needed time.

The story of programmer Sergei Aleinikov continued. A former senior IT executive at the investment bank Goldman Sachs was indicted in 2010 for “stealing” the source code from Goldman Sachs for high-frequency trading software that he himself developed. A year later, the appeal court overturned the decision of the trial court, declared the arrest illegal, rejected the evidence presented and released Sergei from custody.

The story didn't end there. Now Aleynikov’s lawyers have filed a lawsuit against the FBI agents who led the investigation. There is reason to believe that Goldman Sachs used FBI agents for its own purposes to put a former employee behind bars. As stated in the statement of claim, Goldman Sachs "used the American justice system as its own private punitive force."

The Soviet programmer emigrated to the United States in 1991, made a career, married a local beauty who gave birth to three children (although she left her husband immediately after his arrest), built a huge house according to his own design and earned a million dollars a month on Wall Street (though the money and the house also went to his wife after Sergei’s arrest).

The whole Aleinikov case was initially sewn with white thread. Formally, he was accused of copying 8 megabytes of source code from his office computer after leaving Goldman Sachs for a higher-paying job at Misha Malyshev’s hedge fund. This was the code that Sergei worked on during his career at Goldman Sachs. He was involved in optimizing the company's infrastructure and reducing delays in transactions. Over a couple of years at Goldman Sachs, Sergei earned a reputation as one of the best specialists in his field.

Interestingly, he was not at all worried about trading itself. The “stolen” code did not contain robots or high-frequency trading algorithms (called “strategies”), although this is considered the most valuable element of any high-frequency trader’s software system. Sergei Aleinikov did not believe in this “nonsense,” as he says. He considered trading to be something of a game of chance for adults and was not interested in trading strategies. For him, the work was a technical challenge. He enjoyed optimizing the code and infrastructure to reduce the ping between Goldman Sachs' servers and the NASDAQ exchange by another millisecond.

The “stolen” 8 megabytes are a kind of “diary” of Aleinikov’s work, everything important that he has done over the past years. The irony is that at his new place of work these notes would hardly have been useful to him, because there he had to create a system from scratch. In the month between the “theft” and the arrest, Sergei never logged into the “server in Germany” where he copied his code. “The server in Germany,” which is cited in the indictment, is simply hosting a site that came up first on Google for the query “Free Subversion Repository,” says Sergei, he himself did not even know in which country the server was located.

Aleynikov was one of the few people at Goldman Sachs who had administrative rights in the system, and if he really wanted to copy someone else's code without being noticed, he would have done it more covertly.

In the best traditions of the “hacker madness” of the authorities, the evidence against Sergei was that after copying his code to the repository, he (oh, horror!) erased the history of commands in bash.

In court, Sergei Aleynikov could not explain to the judges why he needed to copy his code to a remote server in Germany. He explained that most of this code is open source programs that he modified. The management previously made it clear that after the open source modification, the program becomes the property of Goldman Sachs, like everything else that is hosted on Goldman Sachs servers.

Fortunately, in the end, reason prevailed and the appeal court made a fair decision. Sergei Aleinikov was acquitted. Now the FBI will have to answer for the damage caused. This is a lost job with a salary of $1 million a year, lost savings, the opportunity to work as a programmer, and a violation of Aleynikov’s right to transfer his property to a new employer.

News, 18:47 03/28/2018

© Louis Lanzano/AP/TASS

Programmer Aleinikov has been seeking an acquittal in the US for code theft for almost 10 years.

Context

MOSCOW, March 28 — RAPSI. Former Goldman Sachs employee Sergei Aleinikov is asking a US court to overturn his conviction for software code theft, The New York Law Journal reports.

The case of programmer Aleynikov has been under investigation for almost ten years. The applicant is trying to challenge the decision of the lower court, which found him guilty of violating the law on classified scientific materials. Aleinikov, who, according to the publication, downloaded the bank’s code to a server in Germany, believes that the law was written before the advent of new technologies that are relevant to this case, and therefore cannot extend its effect in his case.

The fundamental issue was the definition of a tangible and intangible copy of the original code. The applicant's lawyer, Kevin Marino, argues that the code consists of bytes and is intangible, and in addition, the bank did not lose the code itself.

Judge Jenni Rivera expressed the opinion that the code is material if it takes up space on the hard drive. In turn, Judge Leslie Stein said that Aleynikov planned to use the code, and that considering this case through the prism of this law is an attempt to circumvent the gap in the legislation that did not provide for such cases.

Aleynikov was born in Moscow and later became a United States citizen. According to the US Department of Justice, he worked at Goldman Sachs as a programmer for just over two years, during which time he was involved in the development of computer programs and technical support for the bank's trading system.

When he was about to join Teza Technologies, a high-frequency trading project in Chicago, on his last day at his previous job, he copied thousands of pieces of code that belonged to the bank and stored them on a server in Germany, the publication claims.

In June 2009, Aleynikov was charged with theft of computer code, and in 2010, a jury found him guilty of stealing corporate trade secrets in violation of the nation's Theft of Property Act and the Economic Espionage Act. The programmer spent 11 months in prison.

In February 2012, the Federal Court of Appeal reviewed the lower court's verdict, finding no violation of the above laws in Aleynikov's actions. In addition, the court noted that computer code is not tangible property and therefore does not fall under the law under which the programmer was convicted.

Later, the Manhattan District Attorney's Office charged Aleinikov with illegal use of scientific material. A jury found the programmer guilty on one of three counts, but the Manhattan Supreme Court overturned the verdict, noting there was insufficient evidence that Aleynikov created a tangible copy of the computer code or that he wanted to appropriate it. The appeal court overturned the Supreme Court's decision in 2017, and Aleynikov was again found guilty.

Also pending in US courts is a $7 million lawsuit filed by Aleynikov against Goldman Sachs, as well as a claim against two FBI agents for malicious prosecution. Rulings on both claims were deferred pending the court's decision in the main case.