White-Collar Crime

Goldman Sachs must pay legal bills for programmer it accused in code-theft case, federal judge rules

Goldman Sachs Group accused its former computer programmer Sergey Aleynikov of stealing its confidential source code. Now the company must pay his legal bills, a federal judge in Newark, N.J., has ruled.

“Immediate advancement of fees is required, subject only to an unsecured undertaking to repay them if the applicant is unsuccessful in the underlying litigation,”said U.S. District Judge Kevin McNulty.

The ruling requires Goldman Sachs to pay Aleynikov’s legal fees in a New York state-court criminal case. But it leaves the door open to requiring reimbursement of his prior defense fees in a federal criminal case in which he was acquitted, according to Bloomberg and the DealBook page of the New York Times (reg. req.).

The total amount is likely to range from hundreds of thousands to millions of dollars.

Although the bank had argued it was simply a generic courtesy title, Sergey was called a vice president at Goldman Sachs. That made him an officer subject to indemnification of his criminal defense costs, the judge found. He also noted that the bank had paid legal bills for 51 of 53 employees in similar circumstances.

“As a result of these two misguided prosecutions, Sergey Aleynikov lost his marriage, his home, his job, his life savings, his good name and, for a full year, his freedom,” defense lawyer Kevin Marino said in an email to the Times. “That the party which provoked all that misfortune must now begin to underwrite it is good news indeed.”

A bank spokesman declined to comment when contacted by the newspaper.

See also:

ABAJournal.com: “2nd Circuit Axes Espionage Conviction of Goldman Sachs Programmer Who Took Source Code to New Job”

ABAJournal.com: “Former Programmer Accused of Stealing Source Code Wants Goldman Sachs to Pay $2.4M Legal Fees”

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