To be argued by

ELIZABETH ROPER
COVER

New York Supreme Court

Appellate Division - First Department

THE PEOPLE OF THE STATE OF NEW YORK,

Appellant,
- against SERGEY ALEYNIKOV,
Defendant-Respondent.
BRIEF FOR APPELLANT
CYRUS R. VANCE, JR.

District Attorney
New York County
Attorney for Appellant
One Hogan Place
New York, New York 10013
(212) 335-9000
danyappeals@dany.nyc.gov
ELIZABETH ROPER
DANIEL HOLMES
JEREMY GLICKMAN
ASSISTANT DISTRICT ATTORNEYS
Of Counsel

TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES .............................................................................................. ii
INTRODUCTION................................................................................................................ 1
QUESTIONS PRESENTED .............................................................................................. 1
PROCEDURAL HISTORY ................................................................................................ 2
THE EVIDENCE AT TRIAL ............................................................................................ 9
The Peoples Case ....................................................................................................... 9
The Defense Case ..................................................................................................... 20
POINT I
VIEWED IN THE LIGHT MOST FAVORABLE TO
THE PEOPLE, THE EVIDENCE AT TRIAL AMPLY
DEMONSTRATED THAT DEFENDANT MADE A
TANGIBLE
REPRODUCTION
OR
REPRESENTATION OF GOLDMAN SACHS
SOURCE CODE. ......................................................................................... 21
POINT II
THE EVIDENCE AMPLY JUSTIFIED THE JURYS
CONCLUSION THAT DEFENDANT INTENDED TO
APPROPRIATE PERMANENTLY THE USE OF
GOLDMANS SECRET SOURCE CODE. ............................................ 41
CONCLUSION ................................................................................................................... 54

TABLE OF AUTHORITIES
FEDERAL CASES
Kremen v Cohen, 337 F3d 1024 (9th Cir 2003) .................................................................... 32
Moskal v United States, 498 US 103 (1990) .......................................................................... 38
Ponnapula v Spitzer, 297 F3d 172 (2d Cir 2002) ............................................................ 38, 46
Reno v Koray, 515 US 50 (1995) ............................................................................................ 38
Smith v United States, 508 US 223 (1993)............................................................................. 39
United States v Agrawal, 726 F3d 235 (2d Cir 2013),
cert denied, 134 SCt 1527 (2014) ................................................................................ 36, 52
United States v Aleynikov, 676 F3d 71 (2d Cir 2012)................................................. 5, 36, 39
United States v Bass, 404 US 336 (1971) ............................................................................... 39
United States v Riggs, 739 FSupp 414 (ND Ill 1990) ........................................................... 37
United States v Zhang, 995 FSupp2d 340 (ED Pa 2014)..................................................... 37
STATE CASES
In re Shawn V, 4 AD3d 369 (2d Dept 2004) ...................................................................... 44
People v Blacknall, 63 NY2d 912 (1984) ............................................................................... 46
People v Brigante, 186 AD2d 360 (1st Dept 1992)............................................................... 44
People v Byron, 17 NY2d 64 (1966) ....................................................................................... 26
People v Camelo, 48 AD3d 1303 (4th Dept 2008) ............................................................... 46
People v Carter, 63 NY2d 530 (1984) .................................................................................... 35
People v Colavecchio, 11 AD2d 161 (4th Dept 1960)............................................................ 46
People v Cullen, 138 AD2d 501 (2d Dept 1988) .................................................................. 45
People v Dekle, 56 NY2d 835 (1982) .................................................................................... 27
People v Ditta, 52 NY2d 657 (1981) ..................................................................................... 26
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People v Guzman, 68 AD2d 58 (1st Dept 1979) .................................................................. 44

People v Hampton, 21 NY3d 277 (2013) ............................................................................... 35
People v Hoyt, 92 AD2d 1079 (3d Dept 1983) .................................................................... 46
People v Jennings, 69 NY2d 103 (1986) ........................................................................... 44, 46
People v Kenney, 135 AD 380 (1st Dept 1909) ..................................................................... 45
People v Kent, 19 NY3d 290 (2012) .......................................................................... 30-32, 34
People v Matthews, 61 AD2d 1017(2d Dept 1978) .............................................................. 45
People v Montgomery, 39 AD2d 889 (1st Dept 1972) ........................................................... 45
People v Parker, 96 AD2d 1063 (2d Dept 1983) ................................................................. 44
People v Pauli, 130 AD2d 389 (1st Dept),
appeal dismissed 70 NY2d 911 (1987) ............................................................................. 45
People v Russo, 131 Misc2d 677 (Co Ct Suffolk Co 1986) ........................................... 26, 49
People v Sala, 95 NY2d 254 (2000)....................................................................................... 27
People v Versaggi, 83 NY2d 123 (1994) ................................................................................ 26
State v Barger, 349 Or 553 (OR 2011).................................................................................. 32
Thyroff v Nationwide Mut Ins Co, 8 NY3d 283 (2007) ................................................... 32, 34
Van Vechten v American Eagle Fire Insurance Co, 239 NY 303 (1925) ............................... 45
FEDERAL STATUTES
National Stolen Property Act, 18 U.S.C. 2314 ................................................ 5, 36-37, 52
STATE STATUTES
CPL 40.20(2)(f) ..................................................................................................................... 6
Former Penal Law 1297 ..................................................................................................... 30
Penal Law 5.00 .............................................................................................................. 25, 39
Penal Law 10.00(8) ............................................................................................................. 29
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Penal Law 155.00(1) ........................................................................................................... 29

Penal Law 155.00(3) ........................................................................................................... 52
Penal Law 155.00(4) ............................................................................... 8, 41-44, 50-51, 52
Penal Law 155.00(6) ........................................................................................................... 23
Penal Law 155.05(1) ........................................................................................................... 52
Penal Law 155.30(3) ........................................................................................................... 49
Penal Law 156.00(2) ........................................................................................................... 29
Penal Law 156.00(3) ........................................................................................................... 29
Penal Law 156.30(1) ....................................................................................................... 6, 50
Penal Law 156.35 ................................................................................................................ 29
Penal Law 165.07 ...........................................................................................................passim
OTHER AUTHORITIES
Bill jacket, L.1964, c. 727....................................................................................................... 30
Blacks Law Dictionary ........................................................................................................ 26
Donnino, Practice Commentary to Penal Law 165.07,
McKinneys Cons Laws of New York (1999) ......................................... 25, 30, 43, 44
N.Y.S. Legislative Annual, 1967, c. 791 ................................................................................ 30

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SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE DIVISION: FIRST DEPARTMENT
THE PEOPLE OF THE STATE OF NEW YORK,
Appellant,
-againstSERGEY ALEYNIKOV,
Defendant-Respondent.

BRIEF FOR APPELLANT

INTRODUCTION
The People of the State of New York appeal from a July 6, 2015 order of the
Supreme Court, New York County (Daniel Conviser, J.), which granted defendants
motion for a trial order of dismissal and set aside a verdict the jury returned on May 1,
2015, convicting defendant of one count of Unlawful Use of Secret Scientific Material
(Penal Law 165.07). Defendant has been at liberty throughout these proceedings.

QUESTIONS PRESENTED
1.

Where the evidence unequivocally proved that defendant created a digital

copy of his employer Goldman Sachs secret scientific material by uploading it and
saving it to a hard drive, was the jurys verdict convicting defendant of making a

tangible reproduction or representation of the material based on legally sufficient

evidence?
Justice Conviser found that the evidence was not legally sufficient because
the electronic reproduction made by defendant was not printed on paper
and could not otherwise be touched.
2. Was evidence proving that defendant wrongfully and surreptitiously copied
Goldman Sachs computer code, saved it to several computer devices, and shared it
with his new employer, sufficient to demonstrate defendants intent to appropriate the
use of that material?
Justice Conviser found that the evidence of intent was not legally
sufficient because defendant did not intend to deprive Goldman Sachs of
the majority of the computer codes value.
PROCEDURAL HISTORY
In May 2007, defendant, a computer engineer, was hired by Goldman Sachs as a
vice president in the stocks group. Defendant was tasked with writing and maintaining
software relating to Goldmans high-frequency trading business. In high-frequency
trading, computers communicate with markets and financial institutions to make
extremely fast decisions about trading stocks, options, and futures. It is a highly
competitive and profitable business, and firms engaged in this kind of trading invest
heavily in developing their software and maintaining its secrecy.
By early 2009, defendant was making $400,000 a year at Goldman. That April,
he was offered, and accepted, a position with a new high-frequency trading firm called

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Teza Technologies (Teza). Defendant was hired to write and develop software for
Tezas high-frequency trading system, which was nonexistent at that point. The firm
hoped to be actively trading by December 2009 -- an ambitious goal. As compensation
for creating the software needed to run Tezas business, defendant would be paid $1.2
million per year, triple the amount he was making at Goldman.
Defendants last day of work at Goldman was June 5, 2009. That day, shortly
before the close of business, he ran a computer program he had written, entitled
backup, on his work computer. The program selected certain designated proprietary
files from Goldmans source-code repository and compressed them into two files called
tarballs. He then uploaded the files to a hard drive on a subversion computer in
Germany, another type of source-code repository. The selected files included highly
valuable programs that Goldman had developed over the course of decades, which
would be helpful to a competitor trying to start a new high-frequency trading business.
After running the script, defendant attempted to erase any record of it by deleting the
script and the bash history on his work computer. The bash history houses the recent
commands a user has run; there is no legitimate reason a user would delete it.
Unfortunately for defendant, Goldmans system periodically created a separate copy of
each users bash history, and the commands detailing defendants conduct (as well as
his attempts to delete those commands) had already been saved on Goldmans servers.
Approximately three weeks later, a routine internal audit by Goldman alerted the
firm to the large data transfer over 13 megabytes made by defendant on June 5.
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Goldmans internal investigation revealed that defendant had also transferred files out
of the network on June 1, 2009.1 Further investigation by Goldman unearthed
defendants bash history, and the firm was able to see the script that defendant had run
on June 5. Examination of that script revealed which files defendant had taken.
When Goldman employees reviewed the list of files transferred by defendant on
June 5, they were alarmed. The transfer included several valuable components of the
firms high-frequency trading platform, which had taken years to develop at great
expense to Goldman. All of the files taken were proprietary to Goldman, and
significant efforts had been made to safeguard their secrecy. If another firm learned
Goldmans trading strategies or how certain parts of their trading software functioned,
Goldmans competitive edge would be blunted and their significant investment in
developing this software would be in jeopardy.
By the time Goldman learned of the illicit transfer of its files, defendant had
already begun work at Teza. Although defendant had been at Teza for only a few
weeks, he had already uploaded to Tezas source-code repository copies of programs
virtually identical to some of those he had taken from Goldman.

Because of a pre-trial suppression ruling (A048) and a ruling during trial precluding
the People from calling a specific witness, relatively little evidence was introduced at trial
regarding the June 1 transfer. The jury hung on the count arising from the June 1 transfer, and
the People do not seek reinstatement of that count, which was covered by the dismissal order.
1

Numerical references preceded by the letter A are to the Peoples Appendix.

Numerical references not preceded by any letter are to the trial transcript, which is reproduced
on a CD in the Peoples Appendix at A119.

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On July 3, 2009, FBI agents arrested defendant. That same day, defendant made
a series of statements in which he initially denied taking any proprietary files from
Goldman and claimed to have taken only open source materials. When confronted
with the script he had run on June 5, defendant expressed surprise that agents had
recovered his bash history, and eventually conceded that he had copied proprietary files
and uploaded them to a computer in Germany. Defendant also admitted having copied
the code onto his home computer, his wifes home computer, a laptop, and a thumb
drive. That day, agents seized several devices from defendants home; subsequent
analysis revealed that the transferred files were present on two desktop computers and
a digital music player.
In February 2010, a federal grand jury in the United States District Court for the
Southern District of New York charged defendant with, inter alia, violations of the
National Stolen Property Act, 18 U.S.C. 2314. He proceeded to trial in federal court
and, on December 10, 2010, a jury convicted him as charged. On April 11, 2012, the
United States Court of Appeals for the Second Circuit reversed defendants federal
convictions. United States v Aleynikov, 676 F3d 71 (2d Cir 2012). With respect to the
National Stolen Property Act, the Second Circuit held that the computer code stolen
by defendant from Goldman did not constitute goods, wares, or merchandise within
the meaning of the federal statute.
In September 2012, a New York County grand jury charged defendant with two
counts of Unlawful Use of Secret Scientific Material (Penal Law 165.07) and one count
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of Unlawful Duplication of Computer Related Material in the First Degree (Penal Law
156.30[1]). 2

After extensive pretrial motion practice, defendant proceeded to trial

before the Honorable Daniel P. Conviser and a jury on April 8, 2015. At the close of
the Peoples case, defendant moved for a trial order of dismissal with respect to all
counts. Defendant argued that the evidence was not sufficient to show (1) that he had
made a tangible reproduction of the stolen computer code, absent proof that he had
printed the code onto paper, and (2) that he had the intent to appropriate the use of the
code, absent proof that he intended to deprive Goldman of over half the value of the
code. In fact, the evidence plainly met the legal requirements of the Unlawful Use
statute: there was abundant evidence that defendant electronically reproduced the
code onto a hard drive, making a tangible reproduction of it, and there was likewise
ample proof that defendant intended to appropriate the use of the stolen code, without
regard to any specific loss of value to Goldman Sachs.
Justice Conviser reserved decision on the defense motion and after a defense
case was presented, submitted all three counts to the jury. During eight days of
deliberations, two jurors were excused on consent of the parties, and defendant agreed
to proceed with a jury of ten. Ultimately, the jurors acquitted defendant of Unlawful
Duplication of Computer Related Material in the First Degree, could not reach a

Defendants prosecution in New York County arose from the same conduct that was
the basis for his federal indictment but was a permissible second prosecution under CPL
40.20(2)(f), as the trial court properly determined in its May 2, 2013 decision (A008).
2

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unanimous verdict on the count charging Unlawful Use of Secret Scientific Material on
June 1, 2009, and convicted him of the count charging Unlawful Use of Secret Scientific
Material on June 5, 2009.
On July 6, 2015, Justice Conviser set aside the jurys verdict. Justice Conviser
framed the operative questions as (1) whether [the] evidence was legally sufficient to
demonstrate the source code was tangible (Decision: A268), and (2) whether the
evidence sufficiently demonstrated that defendant intend[ed] to obtain a majority of
the full value of Goldmans high-frequency training software, to the detriment of
Goldman (Decision: A278).3 Answering the first question in the negative, Justice
Conviser held that because the source code was not printed out onto paper, or any
medium outside a computer or thumb drive, it was not tangible (Decision: A23637, A267, A271-75). The court acknowledged that this result was nonsensical, but
concluded that the 1967 legislature that enacted the Unlawful Use statute could not
possibly have contemplated the type of electronic reproduction made by defendant in
this case.
With respect to defendants intent to appropriate the use of the code to himself,
the trial court held that although the evidence demonstrated that defendant wrongfully
duplicated the computer source code and intended to derive a significant economic

After issuing the Decision and Order on July 6, 2015, Justice Conviser issued a
Corrected Decision and Order the following day (July 7, 2015). Citations in this brief are
to the corrected decision (A232).
3

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benefit from it, it was insufficient to convict defendant of what the court characterized
as this particular obscure crime (Decision: A279). Justice Conviser determined that
although the Unlawful Use statute criminalizes the reproduction of material, rather than
the traditional larcenous taking of such material, it also requires that the material be
taken from its owner such that the owner is actually deprived of it (Decision: A279,
A284-85). In addition, the trial court ignored the first part of the definition of
appropriate, which refers to the intent to exercise control permanently over the use
of the property, even though the jury was properly charged on the complete definition.
Instead, Justice Conviser focused exclusively on the portion of the definition that refers
to intent to exercise control over property for so extended a period or under such
circumstances as to acquire the major portion of its economic value or benefit. Penal
Law 155.00(4). The court held that because there was no evidence that defendant
intended to diminish Goldmans high-frequency trading profits by more than 50%, or
obtain a profit for himself equal to that amount, the verdict could not stand (Decision:
A278-83, A289-90, A297-98).
This Peoples appeal ensued. As we now demonstrate, there is no question that
defendant made a tangible reproduction of Goldmans source code when he uploaded
and saved it to a German server outside the Goldman network. The evidence also
plainly showed that defendant intended to exercise control permanently over the use of
that source code. As such, the Peoples evidence met all the statutory elements of Penal
Law 165.07, and the jurys verdict should be reinstated.
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THE EVIDENCE AT TRIAL

The Peoples Case
In May 2007, defendant joined Goldman Sachs as one of about 30 computer
programmers working on the firms high-frequency trading software (Schlessinger: 23335; WILLIAM WHALEN: 656-57). 4 High-frequency trading is a process in which
computers are used to trade stocks, options, and futures (Schlessinger: 218-19, 226). It
requires computers to make very rapid decisions that determine prices and generate
trades and orders (Walker: 443). High-frequency trading can be very lucrative. In 2009,
Goldman made about $300 million from this business (Walker: 465; Shakhnovich: 570).
High-frequency trading is a highly competitive environment (Schlessinger:
220), since many participants are vying for trades and prices that will allow their firms
to profit (Walker: 448-49). Firms engaged in high-frequency trading keep their software
confidential because it contains algorithms that dictate, for example, how each firm
prices stocks (Walker: 455). Goldman took several steps to safeguard the secrecy of its
high-frequency trading code, which represented the infrastructure that a decade of

The evidence of defendants conduct at Goldman came mainly from his former
Goldman colleagues, including ADAM SCHLESSINGER, who supervised the stock group
(Schlessinger: 234), PAUL WALKER, who was responsible for the data and software used in
Goldmans high-frequency trading business (Walker: 441-42), KONSTANTIN
SHAKHNOVICH, a managing director in the strats group (Shakhnovich: 566), MARK
FREEMAN, who was in charge of the source-code repository (Freeman: 401-04), JOHN
YANAGISAWA, who worked in Goldmans information security section (Yanagisawa: 5758), and MOAZZAM ALI, who was in charge of overseeing Goldmans computer system
(Ali: 123-24).
4

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experience has allowed [them] to create through tens or hundreds of developers

working on it (Walker: 456). The programs taken by defendant gave Goldman a
competitive advantage in the field (Walker: 449-50; NAVIN KUMAR: 1193), and their
dissemination to a competitor could financially harm Goldman and benefit that
competitor (Schlessinger: 220-21, 279-80, 286; Walker: 460-62; Kumar: 1219).
One key to successful high-frequency trading is the computer systems
connectivity (Walker: 444). The system has to collect huge amounts of data about
stock prices very quickly, so that the computer knows the price at any given second
and can send orders to exchanges all around the world (Schlessinger: 223, 227; Walker:
445). A second requirement is business logic the algorithms the firm uses to make
decisions about what to trade and at what price (Schlessinger: 223, 227; Walker: 44445). A third key component is the infrastructure that supports the system and keeps
it running robustly throughout the trading day (Schlessinger: 228; Walker: 445).
Faster high-frequency trading systems have an edge over slower ones because
there is less delay between the opportune time to buy something and the time the trade
is executed (Schlessinger: 223-25; Kumar: 1202). Speed is also important because
markets change rapidly and because every competitor is trying to take advantage of the
same events and information (Schlessinger: 225-26; Walker: 447-48; Kumar: 1203).
The high-frequency trading infrastructure that existed at Goldman in 2009 was
based on a system the firm purchased in 1999 as part of its acquisition of Hull Trading
(Schlessinger: 229). The purchase price of Hull Trading was around $450 million
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(Schlessinger: 229). In the ten years after that acquisition, Goldman updated portions
of its high-frequency trading software on a daily basis (Schlessinger: 229). In addition,
Goldman programmers also wrote new pieces of software that were integrated into the
system, sometimes over the course of several months or years (Kumar: 1194).
Defendant was assigned to the infrastructure section of Goldmans stock group
(Schlessinger: 231-32, 235). Like all Goldmans programmers, he had access to the
source code computer instructions written in a human-readable format that ran the
firms high-frequency trading system (Schlessinger: 235-36, 307-09; Freeman: 405). He
did his work, in fact, by copying code from Goldmans repository, modifying it, testing
it to see if his improvements worked, and then merging it with the firms production
code so that it became part of the system in use (Schlessinger: 289-90; Walker: 452-53).
However, like every other programmer, defendant was never allowed to copy
Goldmans source code outside of Goldmans network (Schlessinger: 289-90; Freeman:
421; Walker: 454; Shakhnovich: 571). Every employee signed confidentiality and nondisclosure agreements that emphasized how important it was to the firm to protect its
source code and keep secret the components of its trading system (Freeman: 432, 43435; Walker: 456, 496-500). Employees were reminded of these policies every time they
logged onto the system (Yanagisawa: 67-70). If an employee wanted to work from
home, he could use remote access or a firm laptop so that all the code stayed within
Goldmans network (Yanagisawa: 66; Freeman: 436; Walker: 453-54). Thus, there was

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never any reason for an employee to transfer files to himself outside of the network
(Schlessinger: 254).
Defendants initial salary with Goldman was $270,000 (Whalen: 658). In 2008,
after defendant said he was moving to another firm, Goldman convinced him to stay
by raising his salary to $400,000 (Schlessinger: 233, 331). Only a few months later, in
March 2009, defendant entered into employment negotiations with Teza Technologies,
a startup high-frequency trading firm headed by Mikhail Malyshev (Schlessinger: 239;
DEMIAN KOSOFSKY: 523-24, 532, 536, 551).

Teza had no infrastructure,

connectivity, or equipment at the time (Kosofsky: 527). They hoped to build their own
software from scratch and, despite having only five employees, be fully operational
by late 2009 (Kosofsky: 527-29, 532-34; Exhibit 39). Defendant was recruited to write
software for the system Teza hoped to create (Kosofsky: 536; MICHAEL McSWAIN:
940, 1079). Teza agreed to pay defendant $1.2 million annually, approximately three
times what he was making at Goldman (Schlessinger: 239; Walker: 516).
In April 2009, defendant again announced he was leaving Goldman and would
be joining a start-up high-frequency trading venture as head of infrastructure
(Schlessinger: 238-39). About a week before he left Goldman, defendant received an
email from Malyshev (Kosofsky: 531-34; Exhibit 39). In the email, entitled Lets move
fast (Exhibit 39), Malyshev told defendant and the other Teza employees:
It is now less than 6 months left to the system launch. Huge
body of work ahead of us. We need the fastest and most
scalable trading platform that will be our edge on the market.
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We need an analytics platform that will allow us [to] invent

and develop new trading strategies. In combination these
two will propel us ahead of [the] competition.
I have no doubt that with the team that we are putting
together we will become the best in the business. That being
said, we have to focus. We are up against experienced and
very wealthy competitors that are currently way ahead of us,
and using their cash from last year to buy their way out of
tougher times ahead. . . . We are better and smarter but we
have to be moving full speed ahead to even catch up with
them.
So, let[s] triple our focus, lets execute relentlessly, and strive
for excellence in everything we do. The future is ours to
own and the game is already on. Lets move fast.
Defendant left Goldman as scheduled on June 5, 2009. Days later, Teza created
a source-code repository account at svn.cvsdude.com, a website that allowed firms to
share source code with registered users (JEREMY KIRKWOOD: 397-400; Exhibit 35).
By June 25, 2009, defendant had placed some software in Tezas repository, including
code that could be used in high-frequency trading applications and that would be useful
in setting up Tezas trading system (Kosofsky: 539-44, 562-65). A subsequent review
of some of that code revealed that it had been copied from certain programs defendant
took from Goldman (Kumar: 1196-97).
On June 30, 2009, Goldmans information security section reviewed information
collected by their monitoring systems (Yanagisawa: 58, 63). This system included a
program designed to detect large amounts of data being transferred out of the network
(Yanagisawa: 63; Schlessinger: 245). Because the program was new, however, there

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were not enough people in place to review the reports without delay (Yanagisawa: 75,
112-13; Schlessinger: 245). Thus, it took a few weeks for the staff to review the report
about two transfers of data that had occurred at 5:23 p.m. on June 5, 2009, defendants
last day at Goldman (Yanagisawa: 74-75; Ali: 354).
The report showed that the information had been sent to a subversion website,
which is a website designed to allow a user to copy and store computer source code
(Yanagisawa: 76). Goldman security systems blocked access to many subversion
websites, but had missed this one (Yanagisawa: 62-63, 76, 98), which was based in
Germany (MIRKO MANSKE: 1168-74; Exhibits 43A-43C). The monitoring report
showed that the June 5 data-transfer had been very large: 13 megabytes of data
(Yanagisawa: 87-88).
The monitoring program listed the IP address from which the data had moved
out of the firm (Yanagisawa: 74). Checking the records, they found that it was
defendant who had transferred the data (Yanagisawa: 77). The logs also revealed an
earlier transfer made by defendant, on June 1, 2009 (Yanagisawa: 75, 87). A subsequent
search of the German subversion server confirmed that a user saleyn had placed
information on the server and then retrieved it (CANDACE HUNTER: 710-12).5 A
search of two computers and a digital music player found in defendants home revealed
Defendant had used this particular username, consisting of his first initial and five
letters of his surname, elsewhere. For example, defendant listed saleyn@gmail.com as his
personal email address when he joined Goldman in 2007 and in his exit interview in 2009
(Whalen: 657, 671).
5

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that all three contained data from Goldman (EUGENE CASEY: 679-82, 696, 700;
Hunter: 703-06, 710).
Examination of defendants computer at Goldman showed that he had written
a program, or script, containing computer commands designed to compress and copy
data from Goldmans source-code repository (Yanagisawa: 78; Schlessinger: 249-50;
Ali: 342-47, 357-65; Exhibit 13). His script was a two-page program that listed more
than 30 directories in the source-code repository containing thousands of files that
would be compressed into smaller files, or tarballs, when he ran the script
(Schlessinger: 247, 254-58, 269, 272-78, 283-86; Freeman: 418-19; Exhibit 13).
Defendant then encrypted these tarballs of source code and sent them out of
Goldmans network to the subversion computer in Germany (Yanagisawa: 78;
Schlessinger: 249-50; Ali: 342-47, 357-65; Exhibit 13). The script had also been backdated to make it seem two years older than it really was, which was not something that
could happen accidentally (Schlessinger: 252-53).
The Goldman team investigating the transfer looked at the bash history stored
on defendants work computer, which normally keeps track of the last 1,000 commands
typed into the computer (Ali: 125-26). At first glance, it seemed that there was nothing
in defendants bash history relating to the script or the data that was copied (Ali: 131).
However, when they looked at a back-up snapshot version of his computer saved on
the Goldman network, they saw different commands that did tie directly to the June 5
source code transfers (Yanagisawa: 79; Ali: 131, 340-42, 357; Exhibits 2, 11). In fact,
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the snapshot revealed that defendant had also entered a command to remove from the
bash history on his computer all trace of the copying, which was why the commands
were not discovered earlier (Ali: 346-48). Although he was successful in removing the
evidence of his copying from his computer, the information was nevertheless saved in
the networks back-up snapshot (Ali: 349-50).
When defendant was questioned by the FBI, he admitted that he had uploaded
material from Goldman onto the German subversion server and later downloaded it to
his home computer (McSwain: 931-32, 935, 939, 944). Defendant also admitted that
he had found the German server and used it because it was not blocked by Goldman
(McSwain: 940). At first, defendant claimed that all he had taken from Goldman were
two files, AtomicInt and AsyncLogger (McSwain: 939, 944). He said he had copied
the code to inspect it, much like a person in college would go back and read a paper
(McSwain: 944-45).
Later, when he learned his computers would be examined, defendant changed
his story. He told the FBI that he had copied more Goldman files than he intended,
and that those two files and about five megabytes of other data had ended up on his
home computer (McSwain: 943). Pressed further, he said he might have some files
from the Goldman high-frequency trading library (McSwain: 941, 944). He also
admitted that he had tried to erase his bash history because what he uploaded out was
in violation of Goldmans security policy (McSwain: 945).

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In a written statement, defendant once again claimed that he had intended his
script to collect only open source work on which he had previously worked
(McSwain: 950; Exhibit 18). He said he did not realize he had taken more than he
intended until he opened the files at home. He also admitted, however, that he had
deliberately erased his bash history and the encryption software he used to make the
tarballs. He said he had copied the source-code files because he wanted to inspect the
work later in a more usable environment, and claimed that he had not shared
Goldmans source code with any person or corporation (McSwain: 951-52).
In fact, analysis of defendants script showed that his claim that he had copied
only open source files was not true. His script not only copied proprietary materials on
which he had been working before his departure, but also several components created
by other programmers (Schlessinger: 258, 270, 273, 283-85). Defendants script was
designed to copy code for infrastructure and connectivity components, some of which
took other programmers months, if not years, to create (Schlessinger: 270, 273, 279,
283-85; Walker: 458; Shakhnovich: 573). This source code would have been very useful
to anyone trying to replicate what Goldman had done to create a robust system. For a
start-up company, it would have meant they would have the answer in the back of the
book from hundreds of people who had worked on developing the system at Goldman
(Walker: 460-61).

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Defendants script also targeted large parts of the valuation algorithms at the core
of Goldmans high-frequency trading system (Walker: 457-58). Among the valuation
algorithms defendant targeted and took, was the theoretical value library used to price
options in Goldmans option market-making business (Walker: 458). This code
contains the accumulated knowledge and experience of
tens of man-years of development [and] encapsulates a
lot of [Goldmans] experience and things that we have
learned while developing this library and that could be quite
useful to a competitor. [T]he code itself could serve as a
blueprint for somebody [seeking] to build a similar
operation. It also contains information about what our
trading strategy is. It contains information about the
assumptions we make about the relationships between the
prices of different options and the competitor might choose
to exploit that by tuning their strategy to kind of optimally
[interact] or avoid interacting with ours
(Shakhnovich: 573-74).
Defendants script also copied a program called the order book builder or
OBB, which read market data from stock exchanges and organized orders for
trading applications so the system could understand the state of the market
(Schlessinger: 277-78).

Navin Kumar had written this program from scratch for

Goldman in 2007 or 2008 (Schlessinger: 279; Kumar: 1188). He spent three months
solving a single subproblem on this project, and it took him 18 to 24 months to finish
the overall project (Kumar: 1194). Kumars program was a very high performance
component because of its speed (Kumar: 1189-90). Because it relied on very few other
programs, OBB could easily be integrated into systems outside Goldmans (Kumar:
-18-

1190-91). A commercial equivalent capable of just some of OBBs functions would

have cost Goldman $4 million. Defendant had no role in the development of OBB
(Schlessinger: 281-82).
Densemap 1-D and Densemap 2-D were part of the OBB program. These
programs kept track of pricing data (Kumar: 1191, 1196) and would have helped a new
firm start trading more quickly (Schlessinger: 280-81). Having an existing order book
program available to use as a reference would make it easier for someone to create a
new high-frequency trading system (Kumar: 1219). Anyone who got a copy of it would
have access to that technology without the same amount of investment (Kumar:
1192).
A comparison of the code that defendant copied to Tezas code repository with
some of the material he copied from Goldman showed that defendant had been lying
when he said he had not shared Goldmans source code (Chen: 1162-63). In fact, in
the first weeks after he left Goldman, defendant copied several Goldman files to Tezas
repository (Exhibits 52-56). Although he made some modifications to the files, they
tended to involve matters like changing the email address of the codes author from
defendants Goldman email address to his personal email address (Chen: 1165-66).
Kumar compared the source code he had written for Densemap 1-D and
Densemap 2-D with source code defendant had copied to Tezas repository (Kumar:
1196; Exhibits 36, 57-59). Although the code Teza obtained was not a strict copy of
Kumars work for Goldman, it used the same design, which could not have happened
-19-

had it been developed independently (Kumar: 1196-97). In fact, there were roughly a
dozen design decisions Kumar had made during the many months he spent on this
work, and every single one was mirrored in code in Tezas repository (Kumar: 1198).
Defendant thus not only copied proprietary materials, but also shared them with his
new employer (Kirkwood: 398-400; Kosofsky: 539-44, 562-63; Chen: 1162-67).
The Defense Case
Defendant called two witnesses: PETER FRIEDMAN, whose firm recruited
defendant to work at Teza (Friedman: 1392), and MIKHAIL MALYSHEV, who
owned Teza and hired defendant (Malyshev: 1401). Teza had no trading infrastructure
and did not have any high-frequency trading software (Malyshev: 1405-07). Malyshev
admitted that he had sent defendant and other employees the email expressing his desire
that they get Teza up and running by December 2009 (Malyshev: 1416; Exhibit 39). He
claimed that this email was simply a motivational talk (Malyshev: 1416).
Malyshev said he wanted programmers to write Tezas source code from scratch,
so he looked for programmers who were the best of the breed (Malyshev: 1401-02,
1406-07). According to Tezas recruiter, however, defendants $400,000 salary at
Goldman put defendant at the low end of the pay scale for programmers (Friedman:
1396). Malyshev also said he had never wanted any Goldman code, that he did not
think much of Goldmans work in this field, and that he thought computer systems at

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Goldman and other banks tend to be stale (Malyshev: 1407-08).6

Friedman and

Malyshev said they never told defendant to copy Goldmans high-frequency trading
source code and bring it to Teza with him (Friedman: 1394; Malyshev: 1409). However,
Malyshev admitted that he had agreed to pay defendant three times as much as he was
making at Goldman, almost double the highest salary Malyshev offered any other
programmer (Malyshev: 1404, 1420-21). Malyshev even agreed to defendants demand
that Tezas New York office be located close to defendants home, rather than more
centrally to accommodate other employees. Teza fired defendant shortly after he was
arrested (Malyshev: 1422-23, 1428).

POINT I
VIEWED IN THE LIGHT MOST FAVORABLE TO
THE PEOPLE, THE EVIDENCE AT TRIAL AMPLY
DEMONSTRATED
THAT
DEFENDANT
MADE A TANGIBLE REPRODUCTION OR
REPRESENTATION OF GOLDMAN SACHS
SOURCE CODE.
On June 5, 2009, his last day at Goldman Sachs, defendant ran on his work
computer a program he had written, and then took several steps to conceal what he had

Notably, Malyshev admitted that his former firm, Citadel, had sued him for violating
his non-compete agreements. Although Citadel ultimately lost the case, Malyshev admitted
that, during the suit, he violated a court order requiring him to preserve computer evidence
related to the case by running scrubbing software on his computers and deleting certain
active files. Malyshev also admitted that he lied under oath to the court twice about what he
had done to his computers (Malyshev: 1429-31).
6

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done. The program copied thousands of proprietary Goldman files and compressed
them into smaller files known as tarballs which defendant then transferred out of
Goldmans network. Defendant did not just send these files into the ether; his program
created a copy of them on a subversion computer located in Germany, from which
defendant later downloaded them and saved them to several other devices. The copy
of the files that was saved on the German server was physically located on that servers
hard drive in Germany, which was eventually seized and analyzed. The analysis revealed
evidence of defendants placement of Goldmans computer code onto that hard drive
in other words, his creation of a physical, electronic copy of secret scientific material.
Under New York Penal Law 165.07, a person is guilty of Unlawful Use of Secret
Scientific Material (Unlawful Use) when:
with intent to appropriate to himself or another the use of
secret scientific material, and having no right to do so and
no reasonable ground to believe he has such right, he makes
a tangible reproduction or representation of such secret
scientific material by means of writing, photographing,
drawing, mechanically or electronically reproducing or recording such
material.
(emphasis added). The jury reached a guilty verdict as to Count 3, charging Unlawful
Use on June 5, 2009, finding beyond a reasonable doubt that defendant made a
tangible reproduction or representation of the Goldman source code that he copied
and saved to the German server on that date. In setting aside that guilty verdict, Justice
Conviser rejected the jurys considered finding that the digital reproduction of code
created by defendant was tangible; in fact, the judge dismissed the notion that any
-22-

electronic copy of material could fall within the Unlawful Use statute and seemed to
conclude that the statute only covered the creation of paper copies.
As explained below, the jury properly convicted defendant based on legally
sufficient evidence that his conduct constituted a violation of Penal Law 165.07.
Justice Convisers decision to set aside the jurys sound verdict stemmed from a flawed
understanding of the statute and should be reversed.

The Evidence that Defendant Created a Tangible Reproduction or Representation

On June 5, 2009, defendant ran a set of instructions (a script) entitled backup
on his work computer. The script compressed several proprietary files, including several
files containing source code for Goldmans high-frequency trading platform
(Schlessinger: 247-52, 256-57; Ali: 341-47; Freeman: 412-21). Defendant then, among
other things, uploaded a copy of the compressed files from his office in Manhattan to
a subversion repository server in Germany (Ali: 341-47; Schlessinger: 245-47;
Freeman: 412-15). This action created a physical copy of the files on the German server
(Yanagisawa: 75-76, 86; Ali: 347; Freeman: 421-22; Walker, 459-60; McSwain: 939-41,
951, 955, 1048; Manske: 1170-72). 7

Defendant has never disputed that the source code he transferred constituted secret
scientific material within the meaning of Penal Law 155.00(6). Because that element, and
the other elements of the crime of Unlawful Use, are not at issue, we address only the tangible
reproduction or representation and intent to appropriate elements on this appeal.
7

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There was abundant testimony at trial that the copy of the Goldman files
defendant created on the German subversion server was a tangible reproduction or
representation of those files. The files were physically copied to the servers hard drive
(Yanigasawa: 75; Ali: 347; Freeman: 421-22; Walker: 460; McSwain: 939, 951, 955, 1048;
Manske: 1170). Witnesses also testified about the ways in which computer data,
including source code, can be physically manifested on storage media such as hard
drives. For example, data that is sent and saved outside of Goldman can be recovered
or removed from the physical space to which it was copied (Yanigasawa: 101-03).
Source code stored on a subversion server is physically located on that server
(Kirkwood: 397). When source code is stored on a hard drive, it is physical and it
takes up space (McSwain: 1011). Source code can be transferred, received, and
stored on multiple different devices (McSwain: 1049).
Navin Kumar, a highly experienced computer engineer who wrote some of the
code defendant copied, explained that when computer files are stored on a hard drive
or a compact disc (CD), they are physically present on that hard drive or CD
(Kumar: 1199). In the case of a CD, data can even be visually perceptible in the
aggregate (Kumar: 1199). These types of representations of source code are
concrete, even though the abstract code itself is intellectual property (Kumar: 1217). In
this case, defendant created a physical copy of the stolen files by saving them to a
computer in Germany, the hard drives for which were later physically retrieved
(Manske: 1169-71).
-24-

In sum, defendant created a physical copy of Goldmans source code by saving

it to a hard drive in Germany (among other places). This copy was, as the jury found,
a tangible reproduction or representation of the code.

The Meaning of Tangible Reproduction or Representation

Penal Law 165.07 requires that a defendant make a tangible reproduction or
representation of secret scientific material by means of writing, photographing,
drawing, mechanically or electronically reproducing or recording such secret scientific
material. The statute thus contemplates the type of reproduction created by defendant
in this case; it refers to mechanically or electronically reproducing or recording the
material, as opposed to physically taking it, as required by the larceny statutes. See
Donnino, Practice Commentary to Penal Law 165.07, McKinneys Cons Laws of New
York, p. 413 (1999)(in the absence of this statute, copying proprietary information
would not be a crime because it does not constitute a traditional taking). The fact
that defendant created a digital, rather than a paper, reproduction is of no consequence.
Both are tangible within the meaning of the statute.
Because the word tangible is not defined in the Penal Law, it must be given its
ordinary and usual meaning. Penal Law 5.00 states, The general rule that a penal
statute is to be strictly construed does not apply to this chapter, but the provisions
herein must be construed according to the fair import of their terms to promote justice
and effect the objects of the law. Words contained in the statute should be given their
-25-

ordinary and usual meaning present in common usage and understanding. People v
Russo, 131 Misc2d 677, 679-80 (Co Ct Suffolk Co 1986)(applying this approach to
arguments about charges brought under Penal Law Section 165.07); see also People v Byron,
17 NY2d 64, 67 (1966)(statutes may define crimes through the use of ordinary terms
to express ideas which find adequate interpretation in common usage and
understanding). The Legislature intended courts to dispense with hyper technical or
strained interpretations of penal statutes. People v Versaggi, 83 NY2d 123, 131 (1994),
quoting People v Ditta, 52 NY2d 657, 660 (1981).
Like many words, tangible can mean different things in different contexts.
When the jury asked the court during deliberations to define the word, Justice Conviser
obliged. He informed the jurors that the relevant statutes did not define the word and
that, accordingly, the word carried its ordinary meaning. He then provided the full
definition of tangible set forth in Blacks Law Dictionary, and said it was not
controlling, but potentially instructive. He stated:
Tangible means having or possessing physical form,
corporeal, thats number one. Two, capable of being touched
and seen, perceptible to the touch, capable of being
possessed or are [sic] realized. And, three, capable of being
understood by the mind.
(Deliberations: 1903-04).
Defendant objected to the inclusion of the third definition, capable of being
understood by the mind, but did not raise any objection to the remainder of Justice
Convisers dictionary definition instruction (Colloquy: 1129-33, 1269-70, 1494-95). It
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is well-settled that in evaluating the sufficiency of the evidence, this Court is bound by
the un-objected to instructions as delivered to the jury. See People v Sala, 95 NY2d 254,
269 (2000); People v Dekle, 56 NY2d 835, 836 (1982). Here, defendant objected to only
the third dictionary definition of tangible provided to the jury, i.e., capable of being
understood by the mind (Proceedings: 1270). Thus, the evidence of tangibility is
legally sufficient if it falls within either of the first two definitions provided by the court
(i.e., having or possessing physical form, corporeal, or capable of being touched and
seen, perceptible to the touch, capable of being possessed or realized). Under either
of these definitions, or any other common understanding of the word, the proof was
sufficient to show that defendant created a tangible reproduction or representation of
Goldmans source code when he saved it to a physical hard drive.
After all, the plain language of the Unlawful Use statute refers to reproductions
or representations created in a manner that gives them physical presence. The statute
lists electronically reproducing or recording among the ways in which a tangible
reproduction or representation can be made. Implicitly, therefore, the statute itself
provides that any electronic reproduction of secret scientific material is a tangible
reproduction or representation of that material. That makes perfect sense when
applied to the facts of this case, where the evidence at trial readily established that the
codes placement on a hard drive gave it physical presence. The code as stored on the
hard drive was also clearly capable of being possessed; after all, defendant deliberately

-27-

stored it there so that he could access it later, and he further exercised dominion and
control over it by downloading it to multiple personal electronic devices.
In sharp contrast, the Unlawful Use statute does not criminalize the reproduction
or representation of secret scientific material purely in ones mind or shared orally with
another person. Had defendant used his memory to recall certain processes or
algorithms he learned during the course of his work, and used that information for the
benefit of his new employer, he would merely have been violating Goldmans
confidentiality policy (Walker: 509). But when defendant electronically reproduced this
proprietary information on a hard drive, he created a tangible reproduction of it as
set forth in Penal Law 165.07.
No sensible reading of the word tangible supports the trial courts misguided
view that the Unlawful Use statute proscribes only the creation of paper copies of secret
scientific material. Even assuming the word is given its narrowest possible definition,
perceptible to the touch, to the exclusion of all other possible meanings, a digital
reproduction of data is no less tangible than a paper copy. Computer code, in its
essence, is intellectual property, just like a song or a formula. When intellectual property
is written on paper, it is no more perceptible to the touch than it is when written onto
a hard drive. In neither case can a person touch the intellectual property. In both
scenarios, however, a person can touch the medium onto which the property is
reproduced or recorded. This is true whether information is inscribed on a tablet,
written on paper, saved onto a hard drive, or photographed with a digital camera. In
-28-

each instance, the information is reproduced in a manner that gives it physical existence
in other words, a tangible reproduction or representation.
Other sections of the Penal Law support the conclusion that computer data can
be tangibly reproduced in electronic format. Penal Law 155.00(1) includes computer
data or a computer program in the definition of property. Further, under Penal
Law 10.00(8), possess is defined as to have physical possession or otherwise to
exercise dominion or control over tangible property. The Penal Law section dealing
with computer crimes makes clear that computer data and programs may be
possessed. Penal Law 156.35. Thus, because a person can possess an electronic
reproduction or copy of computer data, those reproductions are by definition
tangible. Similarly, Article 156 states that computer data and computer programs
can exist in forms including magnetic storage media, punched cards, or stored
internally on the memory of the computer.

Penal Law 156.00(2),(3).

Justice

Convisers decision not only ignores these illustrative provisions, it effectively renders
them meaningless.
Moreover, the legislative history for the Unlawful Use statute offers additional
support for the view that electronic reproductions of computer data fall within the reach
of the statute. The Legislative Annual proposing Penal Law 165.07 stated that the
section
is designed to cover a situation not within the scope of [the
larceny statute] since the subject of the theft is not property
as that term is defined in 155.00(1) Thus, for example, a
-29-

person who steals the blueprints of a secret process commits

larceny. But one who surreptitiously makes a photographic
copy of such blueprint, leaving the original in its proper
place, does not commit larceny because he is not stealing
property. To make this latter type of conduct subject to
criminal sanction, 165.07 is proposed.
N.Y.S. Legislative Annual, 1967, p.21 (c. 791). Letters in support of the legislation cite
growing concerns over the illegal appropriation of processes, the theft of scientific
data, and the communication of cost information by a treacherous executive to a
competitor. Other materials submitted refer to penalizing a person who intentionally
takes scientific or technical data, and defendants who sell or furnish documents or
information. Bill jacket, L.1964, c. 727 (emphasis added).8 Simply put, in enacting
Penal Law 165.07, the Legislature did not mean to limit criminal liability to the theft
of paper documents or the reproduction of electronic data onto paper.
Although the meaning of tangible in the Unlawful Use statute has not been
the subject of any reported decisions, other New York state precedent supports the
distinction between intangible intellectual property (the code itself) and tangible
reproductions of such property (the reproduction of the code onto a hard drive). For
example, in People v Kent, 19 NY3d 290 (2012), the Court of Appeals addressed the
difference between digital images intentionally saved on a users hard drive and those
Originally, the conduct proscribed by the Unlawful Use statute was contained in the
larceny section of the Penal Law. The 1964 bill jacket therefore refers to what was then Penal
Law 1297, the former larceny provision. In 1967, the crime of Unlawful Use was moved out
of the larceny section and into Penal Law 165.07. See Denzer and McQuillan, Practice
Commentary to Penal Law 165.07, McKinneys Cons Laws of New York, Book 39 (1967).
8

-30-

that are automatically saved. In Kent, the defendant was charged with possession of
images and videos depicting the sexual abuse of children. The defendant had actively
saved some of the files to his computers hard drive, whereas others were merely present
in his internet cache, an area of the computer where internet files are automatically
stored during browsing (often unbeknownst to the user).
With respect to the files that Kent intentionally downloaded, the Court upheld
the convictions because Kent downloaded and/or saved [them], thereby committing
them to the allocated space of his computer. Id. at 304. The Court held that these
acts of digital copying were sufficient to show dominion and control over the property.
Id. On the other hand, the files that were merely present in the internet cache were not
knowingly possessed by the defendant, as there was no proof that the defendant
print[ed], download[ed], or sav[ed] them. Id. at 301. Thus, the Court underscored
that intangible property may become tangible when it is downloaded and/or
saved by a user. Id. at 304.9
The holding in Kent relied on what the Court of Appeals referred to as the
tangibility of the image (i.e., its permanent placement on the defendants hard drive
and his ability to access it later) to show possession. Id. With respect to tangibility,
the Court cited the following helpful analogy: Looking for something on the Internet

Peoples witness Navin Kumar made the same distinction, between files that exist in
a computers volatile memory (and are not present on the hard drive) and files that are present
in persistent storage (Kumar: 1198-99, 1219-20).
9

-31-

is like walking into a museum to look at pictures the pictures are where the person
expected them to be, and he can look at them, but that does not in any sense give him
possession of them. Id., quoting State v Barger, 349 Or 553 (OR 2011). The Unlawful
Use statute makes a similar distinction.

When secret scientific material is merely

observed or recalled, there is no violation of the statute. But when a defendant

reproduces the material in a way that gives it physical presence, such as by saving it on
a hard drive, he creates a tangible reproduction or representation.
In other decisions, the Court of Appeals expressed the sensible view that digital
copies of material should be treated the same way as paper copies. In Thyroff v Nationwide
Mut Ins Co, 8 NY3d 283 (2007), the Court upheld a conversion action involving
electronic data. In doing so, the Court determined that, based on common sense,
electronic and paper documents should be viewed the same way by the law: It would
be a curious jurisprudence that turned on the existence of a paper document rather than
an electronic one. Id. at 292, quoting Kremen v Cohen, 337 F3d 1024 (9th Cir 2003). With
respect to saving files on a computers hard drive, the Court noted that we cannot
conceive of any reason in law or logic why [the] process of virtual creation should be
treated any differently from production by pen on paper or quill on parchment. Id. at
291.

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The Trial Courts Flawed Understanding of the Statutory Requirement

In granting the motion to dismiss, the trial court framed the relevant question as
whether this evidence was legally sufficient to demonstrate the source code was
tangible (Decision: A268). In fact, the properly framed question is not whether the
source code itself was tangible, but whether the reproduction or representation of
the code defendant created was tangible. Penal Law 165.07. This fundamental
misunderstanding was on display throughout the trial, in the questions posed by defense
counsel and in the courts decision setting aside the verdict. For example, during crossexamination of Navin Kumar, defense counsel posed the question, Is there source
code that is concrete? (Kumar: 1217). When the witness answered Representation[s]
of it, counsel replied, I am not asking you about representations. I am asking you
about source code. We are going to get to representations in a moment (Kumar: 1217).
Unsurprisingly, defense counsel never got to his question about representations.
Moreover, throughout the proceedings, the court and defense counsel repeatedly
posed the question of whether source code was tangible property or intangible
property (Colloquy: 392-93, 488, 599, 606, 923, 989-90, 1314, 1320). Of course, the
ordered instructions that made up the code owned by Goldman are intangible
intellectual property. Such code, however, can be represented or reproduced in a
physical way, and it is this type of representation with which the Unlawful Use statute
is concerned. Confusion about this concept tainted the trial courts analysis, and was
responsible, in part, for Justice Convisers misguided decision to undo the jurys verdict.
-33-

Indeed, the courts core misunderstanding of the statutory requirement is on full

display in its analysis of legal precedent. The judge apparently felt that the decision in
Thyroff supported his determination to dismiss the relevant count, because the Court
[in Thyroff] repeatedly referred to computer data as intangible (Decision: A273).
Again, Justice Conviser conflated the concept of tangible property and a tangible
reproduction or representation of property. In fact, the holding in Thyroff is premised
on the notion that there should be no legal distinction between paper reproductions of
data and electronic reproductions of data.
Similarly, the trial courts analysis of Kent focused on one phrase in the concurring
opinion, which stated that because child pornography on the Internet is digital in
format, it is intangible in nature (Decision: A272 [emphasis in Decision]). Justice
Conviser then went a step further, and stated that such a digital image would become
tangible only once it was printed (id.), despite the fact that there is no support for that
myopic view in Kent. In fact, as noted above, the Court in Kent stated that digital files
can become tangible when placed on a hard drive (19 NY3d at 301). Justice Conviser,
however, rejected that portion of the Court of Appeals decision as a minor imprecise
turn of phrase (Decision: A273).
The trial courts discussion of the Peoples evidence also reflects its flawed
analysis of whether defendant created a tangible reproduction of the code. In granting
the motion to dismiss, Justice Conviser wrote that there was scant evidence during the
trial concerning the physical form of the computer code Aleynikov uploaded
-34-

(Decision: A267). The judge should, however, have been focused on the physical form
of the copy defendant created, not on the form of the code itself. And, as set forth
above, the testimony was clear that computer code can be tangibly represented on a
computers hard drive (Kumar: 1199, 1217). There was also testimony that electronic
data can be visible in the aggregate, such as when data has been saved to a CD
(Kumar: 1199).
In discussing, and discounting, this evidence, Justice Conviser wrote that
although Kumar claimed that computer data in the aggregate could be seen on a CD,
there was no evidence presented during the trial that this was true (Decision: A267).
Of course, this curious statement was incorrect, because Kumars testimony itself
constitutes evidence. And it bears note that there was no testimony or other evidence
contradicting Kumar; defense counsel did not even pursue cross-examination on this
point. Plainly, Justice Conviser failed to view the evidence on this point in the light
most favorable to the People; after all, in the context of a motion to dismiss, even
scant evidence is sufficient to meet the legal standard.

See, e.g., People v Carter, 63

NY2d 530, 538 (1984); People v Hampton, 21 NY3d 277, 287 (2013)([Q]uestions of
quality or the weight to be given to the proof are not to be considered when a trial
judge evaluates the legal sufficiency of the evidence supporting a jurys guilty verdict).
Evidently, the trial courts misunderstanding regarding the requirements of the
Unlawful Use statute stemmed in part from its inclination to equate defendants state
prosecution with the Second Circuits decision reversing his federal conviction under
-35-

the National Stolen Property Act (NSPA). United States v Aleynikov, 676 F3d at 71.
The federal statute applies when a defendant transports, transmits, or transfers in
interstate or foreign commerce any goods, wares, merchandise, securities or money, of
the value of $5,000 or more, knowing the same to have been stolen, converted or taken
by fraud (18 USC 2314). As a threshold matter, a federal courts interpretation of a
federal statute has no bearing on whether a state jury properly convicted defendant
under state law. But even assuming the Second Circuits analysis of the NSPA was
relevant, its decision is wholly consistent with the state court jurys determination that
defendant made a tangible reproduction of Goldmans source code.
In United States v Aleynikov, the Second Circuit was concerned not with whether
defendant made a tangible reproduction of the data, but whether the property he stole
and transported was itself tangible.10 The Second Circuit noted that under the NSPA,
there is no violation of the statute unless the good is transported with knowledge that
the same has been stolen; the statute therefore presupposes that the thing stolen was
a good or ware, etc., at the time of the theft. Id. (emphasis in original). In other words,
the NSPA looks to the character of the property (in this case, computer source code)
In a subsequent decision, the Second Circuit upheld a conviction under the NSPA
where a defendant stole computer code printed on paper, because that defendant assume[d]
physical control over the code as he transported it across state lines. United States v Agrawal,
726 F3d 235, 252 (2d Cir 2013), cert denied, 134 SCt 1527 (2014). Justice Conviser cited Agrawal
in support of his ruling that computer code is intangible (Decision: A268-71). But both
federal cases addressed the form of the stolen property at the time of the transfer, not the
form in which it was ultimately stored.
10

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at the moment it was stolen and transported across state lines. At that point, the Second
Circuit reasoned, the code constituted intangible intellectual property, as opposed to
the type of goods and wares that ordinarily move in interstate commerce.11 The Second
Circuit also acknowledged, however, that defendants ultimate storage of the code onto
a hard drive created a tangible reproduction of it. Id.
Despite the abundant authority supporting the view that data stored on a hard
drive is a tangible reproduction or representation of it, the trial court seemed
determined to read Penal Law 165.07 in a way that limited it to reproductions made
on paper. Justice Conviser looked at the enumerated ways in which a tangible
reproduction or representation can be made (writing, photographing, drawing,
mechanically or electronically reproducing or recording), and determined, curiously,
that they must all refer to paper copies. Otherwise, he opined, the word tangible in
the statute would be meaningless (Decision: A265-67).
In reaching this conclusion, which he conceded makes little sense from a
policy perspective (Decision: A277), the judge posed the following question: If
Aleynikov made a tangible electronic reproduction in this case, what would an
It bears note that not all federal courts have taken the view that computer code is
intangible property for purposes of the NSPA. In cases with similar facts, courts have held
that electronically stored data does, in fact, fall within the definition of tangible goods under
the NSPA. See United States v Riggs, 739 FSupp 414, 421 (ND Ill 1990)(there is no reason to
hold differently simply because [the defendant] stored the information inside computers
instead of printing it out on paper; in either case, the information is in a transferrable,
accessible, even salable form); United States v Zhang, 995 FSupp2d 340, 349 (ED Pa
2014)(information stored in computer hardware has a physical manifestation).
11

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intangible electronic reproduction have looked like? (Decision: A265). But this
hypothetical question is itself misdirected. Electronically reproducing or recording
material is simply one of the ways in which a defendant could make a tangible
reproduction in violation of the Unlawful Use statute. The statute plainly does not
address the means by which one might create an intangible electronic reproduction or
recording, or whether it is even possible to do so. To the extent that the question posed
by the trial court is relevant, however, there was evidence regarding when an electronic
reproduction of computer data might be intangible. Navin Kumar testified that
computer data is not physically manifested when it is in the computers volatile memory.
Not until it is saved to the persistent storage, such as the hard drive, does it gain physical
existence and become tangible (Kumar: 1198-99, 1219-20).
As an alternate source of support for his ruling that tangible reproductions or
representations must be paper copies, Justice Conviser cited the rule of lenity,
incorrectly holding that this axiom obliged him to adopt the definition of tangible
most favorable to defendant (Decision: A275-77). The rule of lenity does not, however,
compel this illogical result, nor is it applicable in this case. The mere fact that narrower
constructions of a word are possible does not make a statute subject to the rule of lenity.
See Moskal v United States, 498 US 103, 108 (1990)(criminal statute not automatically
deemed ambiguous for purposes of rule of lenity because conflicting judicial authority
exists or narrower constructions are possible); Ponnapula v Spitzer, 297 F3d 172 (2d Cir
2002); see also Reno v Koray, 515 US 50, 64-65 (1995)(A statute is not ambiguous for
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purposes of lenity merely because there is a division of judicial authority over its proper
construction)(internal quotations and citation omitted); Smith v United States, 508 US
223, 239 (1993)(The mere possibility of articulating a narrower construction does
not by itself make the rule of lenity applicable). The rule is reserved for cases where,
after seiz[ing] everything from which aid can be derived, a court is left with an
ambiguous statute. Id. at 239 (citing United States v Bass, 404 US 336, 347 [1971]).
In fact, the Unlawful Use statute is not ambiguous at all when the plain meaning
of its terms is considered. As stated above, Penal Law 5.00 requires that statutes be
read according to the fair import of [their] terms to promote justice and effect the
object of the law. The trial courts decision ignored this rule of statutory construction,
and instead cited the Second Circuits decision in defendants federal case for the
proposition that federal crimes [like state crimes] are solely creatures of statute
(Decision: A277, quoting United States v Aleynikov, 676 F3d 71, 79 [2d Cir 2012]). Justice
Conviser provided no explanation or support for his insertion of the phrase like state
crimes; in fact, the principles of interpretation of federal and New York state law are
different. When Penal Law 165.07 is read with an eye toward promot[ing] justice and
effect[ing] the object of the law, (Penal Law 5.00), as required by New Yorks
legislature, the jurys verdict must be sustained.
Finally, Justice Convisers application of the relevant legislative history was
fundamentally flawed. Rather than reading Penal Law 165.07 in accordance with the
fair meaning of its terms, the Court looked to whether the precise facts of defendants
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case could have been foreseen at the time the statute was drafted. Justice Conviser took
what he considered judicial notice of the fact that computers were at a very primitive
stage of development in 1967 (Decision: A266). The court reasoned that because the
drafters of the statute could not have imagined that in 2009, significant lines of
computer code could be transmitted in an instant across thousands of miles to
Subversion websites then transferred back across those miles to a personal computer,
defendants actions could not fall within the purview of the statute (Decision: A266).
This strained and overly narrow reading of the law contributed to the trial courts
erroneous decision to set aside the jurys verdict. It is also worth noting that electronic
reproductions of data in digital format were, in fact, occurring by 1967. After all,
television and telephone signals were being transmitted by satellite, and disc drives had
already been used to store computer data for years.
*

In setting aside the verdict, Justice Conviser opined that the legal standards
applicable to the instant crime were anything but [simple] (Decision: A298). In fact,
an examination of the Unlawful Use statute and the relevant authorities, coupled with
an understanding of the evidence at trial, leads to the straightforward conclusion that
defendant created a tangible reproduction of intellectual property. The source code
defendant stored on the subversion server had physical form, was capable of being
possessed and understood, and was just as perceptible by touch as it would have been

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on a piece of paper. The trial court erred in setting aside the jurys thoughtful and wellreasoned verdict.

POINT II
THE EVIDENCE AMPLY JUSTIFIED THE JURYS
CONCLUSION THAT DEFENDANT INTENDED TO
APPROPRIATE PERMANENTLY THE USE OF
GOLDMANS SECRET SOURCE CODE.
Under Penal Law 165.07, the People were required to prove that defendant
intended to appropriate the use of the source code he reproduced.

Penal Law

155.00(4) defines appropriate, and states that:

To appropriate property of another to oneself or a third
person means (a) to exercise control over it, or to aid a third
person to exercise control over it, permanently or for so long
a period or under such circumstances as to acquire the major
portion of its economic value or benefit, or (b) to dispose of
the property for the benefit of oneself or a third person.
The evidence at trial plainly showed that defendant intended to exercise control over
the use of the Goldman source code permanently.
On June 5, 2009, minutes before his employment at Goldman was to end,
defendant ran the script he had created (and backdated, to conceal its creation date) on
his work computer. The script was carefully designed to select and copy valuable parts
of Goldmans proprietary high-frequency trading code. Defendant then encrypted the
files and sent them to one of the few subversion servers that Goldmans security had
inadvertently failed to block. Defendant also erased his bash history, believing this
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would conceal what he had done. Later, defendant downloaded Goldmans proprietary
code from the subversion server onto various devices, including his home computer,
his wifes home computer, and a digital music player.
From these steps, it is easy to conclude that defendant intended to acquire the
use of Goldmans proprietary information permanently. After all, he certainly made no
overtures to return the material or to delete it. Moreover, after securing the code in his
personal devices, defendant uploaded nearly identical copies of certain Goldman
programs to his new employers servers, claiming them as his own work. When
questioned later about his conduct, defendant repeatedly changed his story with respect
to what he had taken, and what he had intended to take, in a further attempt to conceal
what he had done: stolen proprietary material, saved it onto multiple devices, and shared
it with his new employer. That evidence readily established the mens rea element of
Unlawful Use. Defendant reproduced Goldmans secret scientific material with the
intent to exercise control over its use, and to do so permanently.
In granting defendants motion to dismiss, the trial court ignored the clause of
Penal Law 155.00(4) referring to permanent control over the use of the property, and
concluded instead that the People had failed to show that defendant intended to acquire
the major portion of [the codes] economic value or benefit. In the courts view, the
second clause exclusively governed the intent element, and required the People to prove
that defendant intended to obtain a certain monetary value at the expense of Goldman.
That determination was erroneous. In fact, the trial court need only have looked to the
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first clause of the definition, which requires intent to exercise control over the property
(in this case, the use of Goldmans computer code) permanently. The specified means
of accomplishing an appropriation (i.e., permanent exercise of control, and exercise
of control for long enough to acquire the major portion of the stolen propertys value) 12
refer not to a monetary profit that a defendant must intend to make, but to a temporal
duration that distinguishes theft from borrowing. Contrary to Justice Convisers
decision, the jury was right to find that defendant acted with the requisite mens rea.

The Law Governing Larcenous Intent

The Penal Law makes it clear that to be guilty of Unlawful Use of Secret Scientific
Material, the defendant must act with intent to appropriate to himself or another the
use of secret scientific material. Penal Law 165.07 (emphasis added). As the practice
commentary notes, this statute is intended to work in tandem with the section
prohibiting the theft of secret scientific material. See Donnino, Practice Commentary to
Penal Law 165.07, McKinneys Cons Laws of New York, p. 413 (1999). Thus,
[i]n the larceny, the defendant steals property consisting of
secret scientific material, for example, a document reciting a
secret scientific formula. In the unlawful use, with the same
larcenous intent with respect to the contents of the formula,
the defendant, for example, photographs the document. In
the absence of the unlawful use crime, the photographing
Penal Law 155.00(4) also states that the intent to appropriate may be established by
a showing that the defendant intended to dispose of the property for the benefit of himself
or another. Penal Law 155.00(4)(b).
12

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would not be a crime since it does not represent a traditional

taking of the property.
Taken together with Penal Law 155.00(4), larcenous intent under Penal Law 165.07
is a purpose to exert permanent or virtually permanent control over the use of the
property taken. People v Jennings, 69 NY2d 103, 118 (1986); Donnino, Practice Commentary
to Penal Law 165.07, McKinneys Cons Laws of New York, p. 166 (1999); see also People
v Brigante, 186 AD2d 360 (1st Dept 1992)(for larceny, the act must contemplate a
substantially permanent appropriation of the property); People v Guzman, 68 AD2d 58,
62 (1st Dept 1979)(for larcenous intent, the goal must have been a permanent
appropriation, not a temporary taking).
In other words, larcenous intent is to be distinguished from a borrowing type
of intent to obtain temporary use or cause temporary loss. People v Parker, 96 AD2d
1063, 1065 (2d Dept 1983); see also In re Shawn V, 4 AD3d 369, 370 (2d Dept 2004)(The
mens rea element of larceny is simply not satisfied by an intent to temporarily take
property without the owners permission).
The concept of permanence is built into the statutory definition of the term
appropriate under Penal Law 155.00(4). And, by using the word appropriate in
the statute defining the theft of secret scientific material and in the statute prohibiting
unlawful use of secret scientific material, the Legislature clearly intended to signal that
both statutes should be read to require the same larcenous intent: a permanent, or

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virtually permanent, exercise of control over property or, in the case of Unlawful Use,
the use of property.
This common-sense distinction between a temporary borrowing and a permanent
larceny has been a part of New York law for more than a century. For example, in
People v Kenney, 135 AD 380, 382-83 (1st Dept 1909), this Court exonerated a man
convicted of theft for taking a horse and wagon belonging to his employer, because the
evidence established he drove the cart around to have a little fun and then left the
horse-and-wagon tied to a lamppost. His intent was not larcenous because he never
intended to accomplish a permanent appropriation of the property. See also Van
Vechten v American Eagle Fire Insurance Co, 239 NY 303, 304 (1925)(drawing the
distinction between the temporary taking involved in joy-riding and the permanent
taking involved in theft).
More modern applications of this joy-riding concept abound. See People v Cullen,
138 AD2d 501 (2d Dept 1988)(defendant drove off with his bosss car, but may not
have intended to keep it permanently or virtually permanently, because he had taken
cars before and always returned them); People v Pauli, 130 AD2d 389 (1st
Dept)(defendant drove off with a cab, but was trying to return it when he had an
accident), appeal dismissed 70 NY2d 911 (1987); People v Matthews, 61 AD2d 1017(2d Dept
1978)(defendant drove off in one of his former bosss cars, but drove it to the police
station the next day); People v Montgomery, 39 AD2d 889 (1st Dept 1972)(defendant drove
off in a cab to escape the scene of a crime, but abandoned it after only a short drive);
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People v Colavecchio, 11 AD2d 161 (4th Dept 1960)(young man drove a car away from a
car wash and crashed it hours later).13
This joy-riding line of cases illustrates that a defendant does not act with
larcenous intent in the narrow set of circumstances in which he intends to return
the owners property in full after a short and discrete period of time. Ponnapula v Spitzer,
297 F3d 172, 184 (2d Cir 2002); see also People v Jennings, 69 NY2d at 118 (there is no
larcenous intent in joy-riding cases [because] the intent [is] merely to borrow the
car without the owners permission); People v Hoyt, 92 AD2d 1079 (3d Dept 1983)(no
larcenous intent when defendant takes guns from his sisters closet, not intending to
withhold them from her permanently, but only for a short time to prevent her from
committing suicide). Here, defendants conduct plainly did not fall into the narrow
set of circumstances that attend these cases.

The Evidence of Defendants Larcenous Intent

The evidence presented at defendants trial fully justified the jurys finding that
defendants goal was a permanent appropriation of the use of Goldmans source code
and not simply a short-term borrowing of its use.

The temporary/permanent dichotomy can also exonerate a defendant when other

forms of property are involved. See People v Blacknall, 63 NY2d 912 (1984)(man pulled an
earring off a woman and then just dropped it); People v Camelo, 48 AD3d 1303 (4th Dept
2008)(defendant took some of his girlfriends belongings, but then voluntarily returned them
within a short time).
13

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First, defendant made his copies of Goldmans secret scientific material late in
the afternoon on his very last day of work there (Yanagisawa: 74-75; Ali: 354). At that
point, he plainly knew that he would be surrendering his access to Goldman and its
computer network once he left and that he, therefore, would be unable to return the
material without revealing that he had taken it in the first place. And, he clearly never
intended his copying of the code to come to light. After all, he not only made
unauthorized copies of Goldmans code, but he also took every step imaginable to hide
his misconduct to try to keep it permanently secret.
Defendant encrypted the tarball files so that they could not be read by Goldmans
system (Yanagisawa: 78). He back-dated his script to make it seem two years older than
it was (Schlessinger: 252-53), deleted his encryption software and his script, and even
entered commands to remove all traces of his code-copying from the bash history on
his computer (Ali: 346-48; McSwain: 941, 944, 951, 1068). Plainly, defendant was not
planning to return the copies he made and intended that his reproduction of the code
would never come to light.
Second, defendants subsequent conduct confirmed that his intent was to
appropriate the use of Goldmans secret scientific material permanently. When he
downloaded the material from the German subversion server, he did not simply place
it on a single device to study it for a brief time before returning it. Instead, as he later
admitted and the evidence showed, he downloaded the copied code to his home
desktop computer, his laptop computer, a thumb drive, his wifes computer, and a
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digital music player (McSwain: 939, 941-44, 951; Hunter: 705-06, 710). Moreover,
defendant also copied several Goldman files to Tezas code repository after making
minor modifications intended to obscure the fact that the source code belonged to
Goldman and not to him (Chen: 1165-66; Exhibits 52-56). The fair inference is that he
intended to control the use of Goldmans source code permanently.
Third, although defendant tried to whitewash his conduct with false exculpatory
statements when he was caught, he never suggested that he planned to return the secret
scientific material or control its use for only a brief period. On the contrary, he
acknowledged that his intent had been to study Goldmans source code and to
inspect the work later in a more usable environment (McSwain: 951-52)(emphasis
added). Similarly, at trial, the defense acknowledged that [defendant] made copies of
the sections of Goldman Sachss source code he thought could be helpful to him in
building Tezas high-frequency trading platform (Decision: A236) a project that was
going to take several months at a bare minimum. In fact, the Court agreed that the
evidence allowed the jury to infer that when [defendant] took Goldmans code, he had
the conscious objective or purpose to use it at Goldmans expense (Decision:
A296)(emphasis added). Thus, the judge seems to have agreed that defendant never
intended to return the secret source code to Goldman.

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Justice Convisers Mistaken Analysis of Larcenous Intent

Despite the strong evidence of defendants unlawful intent, the judge mistakenly
set aside the verdict based on two errors that permeate his analysis of the issue. First,
Justice Conviser seems to have misread the Practice Commentary to mean that Penal
Law 165.07 require[s] that the wrongdoer intend to steal secret scientific material itself
(Decision: A258)(emphasis added). That is simply not true. To be sure, the theft statute
(Penal Law 155.30[3]) requires intent to steal the secret scientific material itself. In contrast,
the Unlawful Use statute (Penal Law 165.07) requires only an intent to appropriate the
use of the material. The statutory definition of appropriation, therefore, must also
reflect that distinction. Thus, an intent to appropriate the use of property means to plan
to exercise control over the use of the property permanently, rather than simply to borrow
the use of the property for the short term. Had Justice Conviser kept that fact in mind,
he would have concluded as the jury did that defendant acted with the requisite mens
rea because the evidence amply justified that finding.
The trial courts decision reflects this confusion on several occasions. For
example, in his discussion of People v Russo, 131 Misc2d 677 (Suffolk Co. Ct. 1986), one
of the few reported decisions addressing the Unlawful Use statute, Justice Conviser
stated that the decision did not analyze the question whether [Russo] had the intent to
appropriate the secret scientific material (Decision: A260)(emphasis added). Similarly, in the
course of his tangibility discussion, Justice Conviser slipped into the mistaken view that
the requisite intent is the intent to exercise control over it [the secret scientific
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material] (Decision: A262)(brackets and ellipsis in original). Once again, it is the

intent to exercise control over the use of the secret scientific material permanently (Penal
Law 165.07, 155.00[4]), rather than permanent control over the material itself, that
governs.
In finding evidence of intent wanting because, in the courts view, defendant did
not have the intent to appropriate the code, Justice Conviser also relied on the wrong
section of the statutory definition of appropriation. Specifically, the judge focused on
the second section of the definition, which also allows the People to establish larcenous
intent by proving that defendant intended to appropriate something for so extended a
period or under such circumstances as to acquire the major portion of its economic
value or benefit. Penal Law 155.00(4). 14 Notably, the judge rarely mentioned the
word permanently except when quoting the statute, and instead devoted his
discussion of intent to the value alternative (e.g., Decision: A280). By the end of his
decision, in fact, the judge apparently concluded that the statute requires proof of the
intent to acquire the major portion of its [the source codes] economic value or

In addressing defendants motion to dismiss at the close of the Peoples evidence

(A120), as to the count of the indictment charging Unlawful Duplication of Computer Related
Material in the First Degree (Penal Law 156.30[1]) on June 5, 2009, which requires a
completed appropriation rather than the intent to appropriate, the court and the parties
focused primarily on the major portion provision of Penal Law 155.00(4). And, as set forth
in the Peoples papers opposing that motion (Peoples Response: A195-98, A203-07), the
Peoples evidence was indeed sufficient to show that defendant exercised control over
Goldmans code for long enough and under such circumstances as to acquire the major
portion of its economic value or benefit.
14

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benefit (Decision: A279) or to obtain most of the economic value or benefit of the
asset, in this case the Goldman code (Decision: A286), or the intent to acquire most
of the economic value or benefit of the Goldman source code (Decision: A288).
This second definition of appropriation, however, is not exclusive; it is simply an
alternative that allows a finding of larcenous intent even when a defendant intends to
return what he takes, if he nonetheless intends to keep it long enough to acquire most
of its value. In contrast, defendants clear intent in this case was to exercise permanent
control over the use of Goldmans source code, without ever deleting it or returning it
to its owner. That intent fully comports with all the larcenous intents set forth in Penal
Law 155.00(4).
Ignoring the fact that the People proved that defendant intended to appropriate
the use of Goldmans source code permanently, Justice Conviser instead spent most of
his decision trying to conjure the value of the code and how to ascertain whether the
major portion of that value had been lost to the owner (Decision: A295-97). By the
end, he concluded that the evidence was insufficient because Goldman did not actually
lose any profit (Decision: A297). Of course, the Peoples theory of larcenous intent in
this case, embodied in the Unlawful Use statute and proven by the evidence, did not
require any deprivation to Goldman. After all, the statute deals with the reproduction of
property, not the taking of property.
The relevant sections of the Penal Law make plain that appropriation of
property does not require deprivation of property. This distinction is particularly
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important when reading the Unlawful Use statute, which deals not with traditional theft
but with reproduction of material. The word appropriate is defined separately from
the word deprive in the Penal Law (Penal Law 155.00[3] and [4]). In the larceny
statute, the two words appear together, as alternate intents that a thief may harbor
(Penal Law 155.05[1]). The Unlawful Use statute, by contrast, refers simply to the
intent to appropriate. This is because Unlawful Use focuses on the defendant who
wrongfully reproduces material, with the intent to exercise permanent (or nearly
permanent) control over its use. It is not concerned with whether the owner of the
material retained the ability to use it. Absent an actual larceny, in every case involving
stolen intellectual property, an owner can still use the formula, algorithm, or process
that has been wrongfully reproduced by another.15 Ignoring this important distinction,
Justice Conviser again focused on the word major, and determined that, to be guilty
of Unlawful Use, a defendant must intend to acquire the majority of an assets value,
leaving the owner with a minority of that value (Decision: A280-89). That was plain
error.
The judges exclusive focus on the alternative economic value theory of intent
is particularly ironic in the context of a crime involving secret scientific material. After
all, the Legislature enacted provisions dealing with the theft and unlawful use of secret
See, e.g., United States v Agrawal, 726 F3d at 235 (criminal conviction of former
employee under the Economic Espionage Act and National Stolen Property Act affirmed,
where the defendant-employee printed out and took copies of confidential computer code,
the originals of which were still owned and possessed by his employer).
15

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scientific material precisely because it is often almost impossible to measure its

monetary value by the usual legal standards (Decision: A259, A292). It is ironic as well,
because analysis of economic value is required only when a defendant plans to return
something after a discrete period, a course this defendant never meant to pursue.
Rather, as the jury found, defendant intended to appropriate the use of Goldmans
source code permanently and thus was properly found to have acted with larcenous
intent.
*

In short, the evidence was clear that defendant intended to control permanently
the use of the code that he reproduced from Goldmans system. The evidence also
explained the motive behind this crime: defendant believed that he could use
Goldmans code to jump-start his own work writing high-frequency trading code for
Teza. The Peoples witnesses agreed with him on that point. However, even if
defendant were wrong even if the Goldman source code would not have been as
useful as defendant thought it was when he unlawfully reproduced it he was still acting
with larcenous intent when he copied the source code, because his intent was to exercise
permanent control over the use of that copied material and not to return it.
Thus, the evidence fully justified the jurys verdict convicting defendant of acting
with intent to appropriate the use of Goldmans secret scientific material in violation of
Penal Law 165.07. That verdict should not have been disturbed.

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CONCLUSION
The order appealed from should be reversed, the verdict convicting defendant
should be reinstated, and the case should be remanded for sentencing.

Respectfully submitted,
CYRUS R. VANCE, JR.
District Attorney
New York County
danyappeals@dany.nyc.gov
ELIZABETH ROPER
DANIEL HOLMES
JEREMY GLICKMAN
Assistant District Attorneys
Of Counsel
April 2016

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