A former Goldman Sachs programmer has been convicted for the second time in four years on charges that he misused his former employer's code, adding a new chapter to an already bizarre and controversial case that has drawn much unwanted attention to the world of high-speed trading and elicited criticism of prosecutorial overzealousness.

Sergey Aleynikov was first convicted in 2011 on espionage and theft-of-trade-secrets charges, stemming from allegations that he stole propriety source code from Goldman Sachs before leaving the firm to take a new job.

The following year, however, a federal appeals court reversed the conviction and Aleynikov's eight-year sentence after determining that the code he helped develop for the high-speed trading firm was not physical property and therefore he could not be charged under the federal theft statute prosecutors used. The appellate court also ruled that Aleynikov had been wrongly charged and convicted of espionage.

The case drew a lot of attention because, as Aleynikov's defense attorney argued at the time, the improper use of code should have been handled as a civil matter involving a breach of contract instead of a criminal matter.

The subsequent reversal of his conviction was significant since it set an important precedent for how code was viewed by the courts. Following the reversal, Aleynikov was released from prison after serving one year of his eight-year sentence, and it seemed his life was moving forward.

But Aleynikov underestimated the wrath and determination of Goldman Sachs and prosecutors. Shortly after his federal conviction was overturned, the district attorney's office in Manhattan found state laws under which they could charge him for the "unlawful use of secret scientific material" and the "unlawful duplication of computer related material".

Today Aleynikov was found guilty under the first charge but acquitted of the second.

"As today’s verdict demonstrates, the misappropriation of proprietary information is a crime," New York County District Attorney Cyrus Vance said in a statement.

The Case Against Aleynikov

Aleynikov, a naturalized US citizen who emigrated from the disintegrating Soviet Union in 1991, earned nearly $400,000 a year as a vice president with Goldman Sachs developing its trading software. The software allowed the company to swiftly process quickly changing market data and place automated trades based on the latest market conditions. Goldman Sachs spent millions to acquire and develop the system, which resulted in millions of dollars in trading profits each year, according to the court record.

Aleynikov worked for the company from 2007 to 2009 when he decided to take a new job with Teza Technologies that would have paid him about $1.2 million.

But days before leaving his old job, Aleynikov encrypted and downloaded files from Goldman Sachs's network that contained code he had worked on. He transferred the data to a website hosted in Germany, then erased the program from Goldman Sachs' network that he had used to encrypt the files, according to court records. He also attempted to delete the network’s bash history showing his activity, which prosecutors insisted was evidence that he knew his actions were wrong.

Assistant US attorney Joseph Facciponti called it “the most substantial theft that the bank can remember ever happening to it,” and said the theft constituted the company’s “entire platform” for high-speed trading.

Alynikov was arrested in July 2009 at the Newark Airport in New Jersey as he returned from a trip to Chicago, where he’d met with his new employers at Teza. Prosecutors said Aleynikov had the code on his laptop when he was arrested, though a search of Teza's computers uncovered no copies of Goldman Sachs’ source code.

Aleynikov acknowledged taking the code but told FBI agents he only intended to collect open source software files on which he had worked, and that his collection of proprietary files on his last day of work had been inadvertent. His attorneys insisted he never gave the proprietary files to anyone else and that the portion of proprietary code he took inadvertently was miniscule—just 32 of about 1,224 megabytes of code—and hardly constituted the company’s “entire platform.”

A jury didn't buy this, however, and he was convicted in 2011 under the National Stolen Property Act as well as the federal Espionage Act.

But an appellate court found fault with both charges, most significantly the one involving theft.

“Because Aleynikov did not ‘assume physical control’ over anything when he took the source code, and because he did not thereby ‘deprive [Goldman] of its use,’ Aleynikov did not violate the [National Stolen Property Act],” the 2nd Circuit Court of Appeals ruled in reversing his conviction.

This didn't stop prosecutors from taking a new tack and charging him under different state laws.

Round Two

"The idea that they would pursue him after he spent a year in jail for crimes he did not commit…" Aleynikov's defense attorney Kevin Marino told WIRED. "I think Goldman Sachs has tremendous power and I think they were able to prevail on these prosecutors, first in the federal court to bring the action against Aleynikov and now the state court."

Marino rejected a plea deal in the New York state case, in the hope that jurors would see that prosecutors were overstepping and had no grounds for charging his client.

“There’s no doubt Mr. Aleynikov did something wrong,” he reportedly told the jury, according to the New York Times. “But this is a very badly misguided case.”

Marino told WIRED that this new conviction also revolved around the issue of whether source code is a tangible object, but while the federal appeals court had ruled in the earlier case that source code is not a physical object, the state jury found that Alynikov did make a "tangible" copy of the code when he downloaded it.

"Is there anything clearer in this world than that computer source code isn't tangible?" Marino asked WIRED. He says his client was convicted because the court left it to the jury to determine the nature of source code.

"And what does the jury know?" he said. "They were put in the position of interpreting a state law, which is not the function of a jury."

This new conviction may not be the end of the road for Aleynikov, however. According to the Times, the judge appeared to be skeptical of the new conviction and could very well overturn it. He reportedly plans to issue a decision within five weeks.

Aleynikov's defense attorney told WIRED he's confident that "at the end of the day [Aleynikov] will be completely exonerated."