Monday, April 27, 2015

I Cannot Stop Writing about Sergey Aleynikov

When Sergey Aleynikov sued the FBI agents responsible for his 2009 arrest, his journey through the court system officially became what we call "Batshit F**king Crazy." After all, this guy appears not to have injured (physically, emotionally, or financially) anyone. His ex-employer, Goldman Sachs Group, seems to have survived his resignation just fine.

Aleynikov, for those who still don't know, is a former Goldman Sachs computer programmer who left to join Teza Technologies in Chicago. However, he made some mistakes when leaving. He apparently transferred computer data from Goldman's high-frequency trading platform to a remote server in Germany, allegedly for use at Teza. (The conclusion may be dubious, for it's unclear what value a fraction of HFT code would have to a third-party, but that's for Aleynikov's highly skilled lawyer to argue - not me.)

To be sure, many a trade-secret defendant makes a similar mistake. But not everyone works for a Goldman Sachs. Aleynikov has turned the tables on Goldman before, and with his most recent lawsuit, he now seeks to turn the tables on those who Goldman allegedly conscripted - the officers who arrested him after he took the computer data.

In most cases, a fact set like this gives way to a rather bland cease-and-desist letter (or more accurately, a cease-desist-and-return letter). Perhaps the parties fight and end up at an injunction hearing. Even then, 90+ percent of such cases settle fairly quickly - often without payment of any money and relatively minor conduct restrictions agreed-upon.

If only it were so easy for Sergey.

To put this in context, we're talking about a guy who:

  1. Provoked an Illinois lawsuit involving Aleynikov's would-be employer, Teza Technologies, LLC, which resulted in a significant and somewhat controversial non-compete rule in our state;
  2. Was convicted in federal court under the National Stolen Property Act and the Economic Espionage Act for transferring some of Goldman's high-frequency trading source code to a remote server in Germany;
  3. Served 51 months in federal prison;
  4. Had his conviction reversed by the Second Circuit Court of Appeals;
  5. Was released from federal prison the same day as his lawyer's oral argument in the Second Circuit;
  6. Effectively encouraged (through the reversal of his conviction) Congress to amend the Economic Espionage Act for the purpose of redefining what type of conduct violate the statute, on a vote of (hold your breath) 388-4;
  7. Was re-arrested and charged under New York state law for theft of intellectual property;
  8. Sued Goldman Sachs to have it advance his legal fees in the New York state proceeding;
  9. Won that advancement action on summary judgment;
  10. Had his advancement case reversed, over a dissent, by the Third Circuit Court of Appeals;
  11. Served as the inspiration for Michael Lewis' phenomenal book Flash Boys, which itself delayed the IPO of Virtu Financial;
  12. Went to trial on the state intellectual property theft charges last week, with a jury still (as of this writing) deliberating over his fate (the trial judge appeared skeptical though); and
  13. (as noted below) Sued FBI agents in a so-called Bivens suit for violating his constitutional rights in arresting him without probable cause back in 2009.

In my opinion, Aleynikov's Bivens case may run directly into the defense of qualified immunity since he must show that the officers violated clearly established law in arresting him back in 2009. Taking the allegations as true, it's hard to see how the law back in 2009 was clearly established such that the federal officers responsible for his arrest now must account for legal damages. After all, Congress did amend the Economic Espionage Act after the Second Circuit reversed Aleynikov's conviction. And the case law on EEA prosecutions is (and was) sparse at best.

The most interesting aspect of the Bivens case is that Aleynikov's essentially treats the FBI as Goldman's agents, willing to do Goldman's bidding in a criminal case. In truth, he needs to make those allegations to get around qualified immunity. His case isn't frivolous, but he seems to be swimming uphill.

Strictly from a lawyer's perspective, even if the Bivens suit fails, I again have to commend Aleynikov's lawyer, Kevin Marino. From his work in getting the conviction overturned to the advancement proceeding in New Jersey, he has achieved simply extraordinary results for Aleynikov and has managed, at times, to outwit the Manhattan DA, the US Attorney, and Goldman itself.

The complaint he filed in the Bivens case is at times bombastic and inflammatory, but it's pretty damned effective and a great read. He knows precisely what he's doing. Whatever happens, and against all odds, Aleynikov fought back and then some. And that too is pretty rare to see.

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