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Did Goldman Sachs Overstep in Criminally Charging Its Ex-Programmer? 186

Posted by samzenpus
from the all-worked-up dept.
theodp writes "Programmer Sergey Aleynikov holds the dubious distinction of being the only Goldman Sachs employee since the 2008 financial meltdown to have actually served time in prison. After leaving Goldman, Sergey was accused of stealing computer code from his former employer and sentenced to eight years in federal prison. Exactly what he'd done neither the FBI nor the jury seemed to understand, so Moneyball author and financial journalist Michael Lewis decided to give Sergey a second trial, assembling a jury made up of programmers and people familiar with high-frequency trading, and asking them to level a judgment. Their verdict? Not guilty. 'I think it's quite possible that Goldman itself didn't know what he had taken, the value of it, the purpose of it, or anything else,' Lewis concludes. 'There was such turnover at Goldman, and the system was such a hairball, that I think people knew pieces but they didn't know the whole. Serge might have been as close as there was to an expert on the how the whole system worked. I think the valuable thing that Serge took when he walked out the door was himself.' Aleynikov was released on appeal in 2011, but subsequently re-arrested on state charges the following year, so he's still not out of the woods yet."
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Did Goldman Sachs Overstep in Criminally Charging Its Ex-Programmer?

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  • by Opportunist (166417) on Sunday August 04, 2013 @03:00PM (#44471415)

    Of all the people who wasted and squandered the money of thousands, if not millions, nobody did time in prison, the only person who did was actually not stealing from decent people but from the thieves, and for THAT he goes to jail?

    • by fustakrakich (1673220) on Sunday August 04, 2013 @03:06PM (#44471455) Journal

      The people who do the actual stealing are holding presidential cabinet positions. Can't touch this... If there were such a thing as justice, Goldman Sachs' charter would have been revoked a long time ago.

      • If there was such a thing as justice, I'd make a killing selling rope and pitchforks... literally.

        • by fustakrakich (1673220) on Sunday August 04, 2013 @03:11PM (#44471483) Journal

          That's vengeance, not justice... Asset forfeiture is sufficient.

          • by gmuslera (3436) on Sunday August 04, 2013 @03:23PM (#44471543) Homepage Journal
            If you count the hundreds to millons that lost job, houses, fell into poverty, prostitution, or died at consequences of them getting richer, in all the world, i think that rope and pitchforks below what justice should do. But if you want to point exactly who died, i'd say justice. What happened with them (and the rest of that mafia [rollingstone.com]) is just the death note for anything that resembles justice in US.
          • by pla (258480) on Sunday August 04, 2013 @03:28PM (#44471567) Journal
            That's vengeance, not justice...

            Sometimes justice means both.


            Asset forfeiture is sufficient.

            Tell that to all the people who died of starvation because Goldman saw profits in artificially inflating the hard red spring wheat futures market.

            No, sometimes "justice" does mean torches and pitchforks. Real monsters just don't take the hint otherwise.
            • Re: (Score:3, Insightful)

              by fustakrakich (1673220)

              Real monsters have learned that society rewards their behavior. Taking away those rewards will go a very long way to correct the problem.

          • by mwvdlee (775178)

            Asset forfeiture is not sufficient; it does nothing to compensate for consumed assets like holidays, rentals and such.
            Nor does it prevent repeat offending.
            Nor does it compensate victims.

            As a result, any sufficiently large financial crime can never be fully repaid by it's offender.

          • You said it. Incarceration for non-violent crimes is detrimental to the individual and collective society. Shooting oneself in the foot, so to speak.

            Only the violent belong in cages. Nice ones too.

            We are a wealth society. Only violent people go to prison and even then the cages should be nice.
            • by jedidiah (1196)

              The only problem with this is that you will also gleefully cripple Tort law at the same time. The end result is that White collar criminals and corporations are left with no meaningful consequences for their harmful actions. It's not even a theoretical possibility.

            • by rtb61 (674572)

              So formulating wars to inflate the profits of the military industrial complex would be a 'white collar crime' even when those wars kill millions. How about pharmaceutical corporations pushing toxic medicines that kill tens of thousands another 'white collar crime'.

              So violent, hmm. Lets say I come to your home, grab you and your family toss you out on the street and then confiscate your belongings, if you protest, I assault you and any members of your family that join you and throw you in a confined space

          • Beyond simple theft (Score:4, Interesting)

            by Livius (318358) on Sunday August 04, 2013 @05:33PM (#44472329)

            If a person is deprived of a very large amount of savings, say an amount that exceeds the lifetime productivity of an average wage-earner, that crime should be put on the level of some lesser version of manslaughter. It's gone beyond theft at that point.

          • Asset forfeiture is sufficient.

            Asset forfeiture is sufficient punishment for criminal acts? Ok, let's start with car thieves and the like. See how that works with small time crooks and how people accept it. If that works out, we can work up to the major criminals in bespoke suits.

        • by bkmoore (1910118)

          If there was such a thing as justice, I'd make a killing selling rope and pitchforks... literally.

          As a believer in nonviolence, a nice hot barrel of tar and a lot of feathers would do.

          • by Holi (250190)

            So your for cruel and unusual punishment. A painful and violent one at that.

            'In a typical tar-and-feathers attack, the mob's victim was stripped to his waist. Hot tar was either poured or painted onto the person while he was immobilized. Then the victim either had feathers thrown on him or was rolled around on a pile of feathers so they stuck to the tar. Often the victim was then paraded around town on a cart or wooden rail. The aim was to inflict enough pain and humiliation on a person to make him either c

            • Perhaps you should save your sanctimony for criminals, and those authorities that conspire not to prosecute the ones wearing bespoke suits, instead of someone blowing off steam on the Internet.

      • by Lennie (16154)

        They are knowingly responsible almost single handedly causing multiple financial crisis or plummeting whole countries in severe dept (just look at Greece as an example).

    • by Rockoon (1252108)

      Of all the people who wasted and squandered the money of thousands, if not millions

      The closest thing to a currency loss and "squandering" was when the FED started rapidly printing money well beyond what the GDP growth indicated was needed.

    • by Seumas (6865)

      Exactly what I clicked on the story to say. Of all the people at Goldman Sachs (and facilitating shadiness on the government-end of the symbiosis), this is the guy they go after?

      How about Henry Paulson

    • by girlintraining (1395911) on Sunday August 04, 2013 @04:04PM (#44471717)

      Of all the people who wasted and squandered the money of thousands, if not millions, nobody did time in prison, the only person who did was actually not stealing from decent people but from the thieves, and for THAT he goes to jail?

      Actually, that's not even entirely accurate. First, he was borrowing open source software. Goldman Sachs liked this because it meant faster development times, which meant faster profits. They didn't re-release modified code, even if it was only a few lines, of course, violating the licensing terms. Parts of the code he was working on he uploaded to an external server, because his company didn't have a proper code versioning system -- there was no way to track changes being made, and so he utilized an open source repository to store changes to chunks of code he was working on. This wasn't publicly available, it was simply put "in the cloud".

      Unfortunately for him, overzealous managers and clueless FBI agents didn't understand what any of this meant, and frequently, and horribly, misinterpreted or misunderstood, what their own experts were telling him. His own attempts to explain what he had done weren't any better understood and were perceived as a confession.

      This is a story of how law enforcement was criminally stupid, and believed what a middle-manager with no expertise in the subject and about five layers removed from what he was panic-striken over... that some immigrant they hired was "up to no good", when in truth, it was business as usual. Naturally, the FBI swung into action, believing the worst possible thing -- he was a terrorist, he was trying to destroy america, he was some kind of muslim radical... because the software he used was called Subversion, and when you add in terms like delete, modify, copy, remove... suddenly it looks like a bona fide CSI episode full of shadowy men exchanging pen drives with knowing winks and nods and death to america would surely follow if their crack investigative team didn't interrogate the suspects while brainy people in the forensics lab tossed around complex terminology and zoomed in on single pixels before saying "AH HA! We've got you now! This single pixel here proves he was the murderer!"

      Criminal. Stupidity. That was the only crime here. It was CSI: FBI Edition... only without the special effects and soundtrack, and by people with their sense of humor surgically removed, rather than having actual personality and interesting dialogue.

      • Re: (Score:2, Interesting)

        by Anonymous Coward

        They didn't re-release modified code, even if it was only a few lines, of course, violating the licensing terms.

        Ok, I'll pull a "Citation required" card. Please show an OSS license that requires releasing code modifications if you have only just modified a private copy of the code and have not redistributed it. So far as I know, it's usually if you redistribute the software or made a copy publicly available are you to provide the changes.

        I mean, is this whole thing a GPL-is-viral kind of blowup on Goldman's part? Does it boil down to Goldman fearing Serge Aleynikov violated GPL (or whatever license) by adding Gold

        • Ok, I'll pull a "Citation required" card. Please show an OSS license that requires releasing code modifications if you have only just modified a private copy of the code and have not redistributed it.

          Er, this programmer took a copy, made some modification to it, and kept a copy of those modifications for himself. Under the terms of most open source licenses... this is a permissible act that cannot be restricted in any way. Whether he chooses to publish such a modification or not is a secondary issue. This alone should have provided legal immunity from prosecution in this fashion... it is the company in breach of contract, not the employee. Any such NDA signed by the employee would be legally unenforceab

          • by serviscope_minor (664417) on Monday August 05, 2013 @04:25AM (#44475315) Journal

            I'm not conviced your interpretation is correct.

            Clearly private copies count as copies otherwise no company would pay for more than one copy of Office.

            The GPL is also somewhat quiet on the matter of copies and focuses on distribution. It therefore appears you can copy as freely as you like, it's only distribution which is in any way restricted.

            Certainly for private use, you can put in proprietary code, copy it as many times as you like and everything is fine. You just don't have permission to -redistribute- the GPL portion without releasing your changes too.

            Setting the ground there, but I suspect we would agree on the above points.

            What seems to be the case is that the company (i.e. agents of the company) has added proprietary code. Any entity which is not the company has no right to copy those parts. It seems that "internal" distribution is OK because you're not redistributing to people as private individuals, but to agents of the company acting as a single entity.

            IOW the private individual still has no right to copy the code.

            IANAL, but this seems to be how the interpretation of it goes. I can't cite any precedent or the applicable law, but no one has ever attempted to uphold the GPL as meaning that internal redistribution meaning that anyone who touches a copy has permission to release it (or that the company has no right to redistribute internally).

            Would be great to hear a real lawyer chime in with a completely non-binding opinion.

    • by UnknownSoldier (67820) on Sunday August 04, 2013 @05:50PM (#44472485)

      You're surprised that banks almost get away with murder and have a fall guy take the blame? This stuff has been going on at _least_ since 2001.

      - - -
      http://en.wikipedia.org/wiki/Brad_Birkenfeld [wikipedia.org]

      In October 2001, Birkenfeld began working at UBS in Geneva, Switzerland, handling private banking, primarily for clients located in the United States. In 2005, he learned that UBS's secret dealings with American customers violated an agreement the bank had reached with the IRS.

      He resigned from UBS in October 2005 and provided written whistleblower complaints to Peter Kurer, Head Counsel for UBS, and other UBS senior executives regarding the illegal practices of U.S. cross-border business.

      He is the first person to expose what has become a multi-billion dollar international tax fraud scandal over Swiss private banking.[2] Despite his unprecedented, extensive and voluntary cooperation, and registering as an IRS whistleblower, Birkenfeld is the only U.S. citizen to be sentenced to jail as a result of the scandal.

      - - -

      The fundamental problem is that the majority of people just don't give a crap about Accountability and Transparency and would rather watch their (un)reality TV so they don't have to think or do about how the government -- which is an extension of themselves -- is screwing up one of the greatest nations.

    • the only person who did was actually not stealing from decent people but from the thieves, and for THAT he goes to jail?

      He did not even steal from the thieves, but was merely incredibly naive. Using a subversion repository outside of his workplace, not for stealing the code, but simply because it was more expedient to do it like that than going through the corporate bureaucracy to set one up internally...

      An blue-eyed innocent error which would go unpunished at a telecom, but not at a paranoid financial company...

  • When a judge, who coded as a hobby, looked at the attorneys and said that any 9th grader could have written a 'range check'... Jury selection is never to get the most intelligent person in a seat...they want the ones who they can paint the picture for, and have them accept it...
  • by Anonymous Coward

    "Did Goldman Sachs Overstep in Criminally Charging "

    Goldman Sachs can bring criminal charges? Really?

    • by ls671 (1122017)

      It wouldn't surprise me at all if they could.

    • by gmuslera (3436)
      They have the DOJ and most of the government in their pocket, they can bring law to whoever they want for whatever reason they want. Now, justice, thats another topic, in which country you try to use that word?
    • by gl4ss (559668)

      well you can too, if you claim that someone stole something from you... even if it was just ideas, or an algorithm or.. thing is, they couldn't even define what he "stole".. it certainly wasn't money or anything tangible.

      • by jedidiah (1196)

        > well you can too, if you claim that someone stole something from you...

        If YOU personally did this, your local police department and the FBI would likely IGNORE you. They may or may not even humor you about taking the charges seriously. They may tell you to your face that they "aren't going to bother".

        When you have a lot of money to throw around and a senator or two in your pocket, THEN they listen to you.

  • by KiloByte (825081) on Sunday August 04, 2013 @03:04PM (#44471443)

    You're assume Goldman Sachs cares about "is this legal?" or "is this right?". What they care is: "will this improve our PR?", "will this scare people from going against us?", "will this scare people from working for us?".

    Seryozha was at that point no longer working for Goldman Sachs, and he dared to do something hostile, so he was an enemy who needed to be punished. Extra bonus for telling the masses "another crooked banker in jail" which makes the uninformed feel as if there's a shred of justice left.

    • Re:Wrong reasoning (Score:5, Insightful)

      by Jane Q. Public (1010737) on Sunday August 04, 2013 @03:12PM (#44471491)

      You're assume Goldman Sachs cares about "is this legal?" or "is this right?". What they care is: "will this improve our PR?", "will this scare people from going against us?", "will this scare people from working for us?".

      This is the whole reasons corporations worked to try to make "non-compete" agreements enforceable: to lock in their control of an employee.

      And that is why non-compete clauses or agreements are no longer enforceable in California. California did a good thing for a change.

      They need to get it through their heads that they do not control the contents of a mind. If they want somebody to "not compete", then the PROPER way to do it is to give them better pay and compensation than the other guy. That's called capitalism.

  • by jeff13 (255285) on Sunday August 04, 2013 @03:09PM (#44471473) Homepage

    Being called a crook by Goldman Sachs is like being called an anti-Semite by Hitler!

  • fta...

    " “The whole point of the Internet is to abstract the physical location of the server from its logical address.”

    so *that's* the point...finally!

    and for all this time i've thought its for lolcats and pr0n...

    • by Macgrrl (762836)

      Hrm... now considering the intersection of a Venn diagram with two overlapping circles, one for lolcats and the other for pr0n.

      Lolcat pr0n - It's more than just Ceiling Cat watching you masturbate.

  • Guilty of somehow offending Goldman-Sachs. In corporate America, that's more than enough to get him thrown in jail. Anyone who doesn't understand this is deluding themselves about the nature of 21st century American's government and legal system.
  • BOB if you don't work 80 hours week we can give you put in lock up for taking all the stuff that you know about us in your head out side of this office and there will no more OT pay.

  • Goldman Sachs didn't charge him with anything the state charged him.
    • Goldman Sachs didn't charge him with anything the state charged him.

      The state is merely an instrument of our financial-pharmaceutical-defense-burgerflippial complex.

      • by mjwalshe (1680392)
        remind me again is it the lizard men or the alien space bats that are the ones behind the NWO
      • by bunratty (545641)
        I hope so. Without that complex, we wouldn't be able to grow and distribute food and other necessities. I would certainly hope all world governments do their best to make sure the complex works even better, and then we can all enjoy a higher standard of living. Why is this "complex" the enemy? Where do you think you get all your nice stuff that our ancestors didn't have? Let me know when you no long purchase any products made from the evil "complex".
      • Yes, but the parent is still correct.

        • by bfandreas (603438)
          It should have been GS suing him. He broke his NDA and that's a contract thing. Instead it was turned into a criminal offence and netted him 8 years in prison.
  • by Joe_Dragon (2206452) on Sunday August 04, 2013 @03:33PM (#44471595)

    Some places have gone way to far and works have no one to stand up for them and even quitting can be seen as planting an time bomb even if all it is stuff that you do day to day that after you quit does not happen and it's leads to an big fail.

  • by Registered Coward v2 (447531) on Sunday August 04, 2013 @03:35PM (#44471603)
    Always get a lawyer before talking to the law.
  • But I'm in two minds. The old rationale was that code is just code, and he was merely getting his hands on something he could have typed out himself given enough time. Which is probably true. The guy's an expert, and he knows how the thing works, so maybe he's saving himself a few weeks of work (In fact, he says he wasn't even going to use it...). I don't buy the whole thing about gaining an advantage in the market and all that. Whatever strengths and weaknesses are in GS's system would be clear to any expe

  • DO NOT work as a programmer for the Financial world. Screw those crooks, let them rot and die in technology hell.

  • He pulled up his browser and typed into it the words: Free Subversion Repository. Up popped a list of places that stored code, for free, and in a convenient fashion. He clicked the first link on the list. The entire process took about eight seconds. And then he did what he had always done since he first started programming computers: he deleted his bash history. To access the computer he was required to type his password. If he didn't delete his bash history, his password would be there to see, for anyone w

    • by hawguy (1600213)

      He pulled up his browser and typed into it the words: Free Subversion Repository. Up popped a list of places that stored code, for free, and in a convenient fashion. He clicked the first link on the list. The entire process took about eight seconds. And then he did what he had always done since he first started programming computers: he deleted his bash history. To access the computer he was required to type his password. If he didn't delete his bash history, his password would be there to see, for anyone who had access to the system.

      What? It is possible to put your password on the command line with subversion, but why would you do that if you are going to delete your history? Why not just let subversion prompt for a password (or use a keyring to store it)?

      I've deleted my bash history after inadvertently or purposely typing a password into a command line -- sometimes putting the password on the command line is the most expedient way to get work done, despite it being a bad idea from a security standpoint -- and sometimes I'll mistype a hostname on an ssh command, but have already typed my password or ssh key passphrase and it ends up being entered as a command (good thing I never user "rm -rf /" as a password). Well, rather than delete the whole history, I u

      • by bfandreas (603438)
        I feel physically sick every time I see my password in plain text written down somewhere that isn't an encrypted keystore. I would also have cleared my history as soon as I had seen it in a way that could be reproduced.

        That's also a good password policy and that kind of Pavlovian conditioning can be quite useful.
  • The article clearly lays out how the programmers are responsible for the big profits, not the bankers who did not even understand what the programmers were doing. But who got the multi-million dolar bonuses?
    • by bunratty (545641)
      Yeah, that's exactly how the world works. Nice observation. Fair is a temporary amusement park.
  • Just curious. They're such a powerful organization that it's difficult to imagine anything short of a strong Federal Gov't reigning them in. I know the argument is that they can only survive because of a Strong Federal Gov't favoring them, but I really see that as a chicken/egg situation. In this case I think they GS chicken came first. e.g. the gov't is a convenient tool for them but in it's absence they'd have plenty of other ways to exercise leverage on us all. They control a good chunk of all wealth in
  • Goldman Sachs wasn't equipped to host their own repository? For code that is supposedly proprietary, valuable and highly sensitive? That's pretty shocking. Either this guy violated company policy by using a free repo host when he was explicitly told not to, or whoever is responsible for IT infrastructure at Goldman should be fired for incompetence. Hosting your own repo is easy enough, and trusting a free repo host for sensitive code is about as stupid as using a pastebin to share medical records.
    • by dbIII (701233)

      Goldman Sachs wasn't equipped to host their own repository

      They are a very strange neo-feudalistic bunch where the execs have to frequently take their wives and kids to a new equivalent of Versailles to remain at their level in the pecking order. Normal rules of sanity do not apply from top to bottom.

  • Justice (Score:4, Interesting)

    by Pino Grigio (2232472) on Sunday August 04, 2013 @06:01PM (#44472551)
    How many Goldman executives are currently serving time in prison? If the answer is zero, then I'm pretty sure there's something wrong with the legal system.
  • I can understand wiping the BASH history. If you logged into databases at the command prompt your password would indeed be preserved in .bash-history so it makes sense.

    But for system logins, particularly if they're *NI/UX systems - you just do SSH keys. No passwords in the clear and auto-login if the host is in your Authorized_Keys files.

    However the think about Goldman taking open source software, modifying it and then refusing to re-submit it runs into some serious GPL issues.
  • Our corporate overlords from Goldman Sachs not only get scott-free from any conceivable fraud. They also have god-given right to put in prison anyone they wish. We - proles - have no rights at all. We're just a cannon fodder for military-industrial-banker-prison complex and we must obey. Corporate fascism with all its "features" (two-tiered justice etc) at its best.
  • read TFA (realy!), makes me so angry! many lessons to be learned from it, but respect for the law ain't one of them.

  • by Squidlips (1206004) on Monday August 05, 2013 @07:52AM (#44476033)
    Anyone remember the end of The French Connection. All the masterminds walked while the chemist served time....
  • by internerdj (1319281) on Monday August 05, 2013 @08:10AM (#44476147)
    The article pointed at it being fear mongering among managment but I wonder since the article mentioned he was one of the top programmers on Wall Street. I wonder if this was an attempt to make him unemployable since he was leaving to go work for a competitor.

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