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Second Circuit Rules in Sergey Aleynikov, Norman Hsu Appeals

By Robyn Hagan Cain on February 22, 2012 | Last updated on March 21, 2019

The Second Circuit Court of Appeals issued opinions in two high-profile criminal appeals last week.

First, the court reversed Sergey Aleynikov's source code theft conviction last Thursday. A jury convicted Aleynikov in December 2010 of stealing trade secrets and transporting stolen property in interstate and foreign commerce, reports The Wall Street Journal. The court issued a single paragraph in Aleynikov's favor, stating, "Upon due consideration, it is hereby ordered, adjudged, and decreed that the judgment of conviction is reversed on both counts and the matter is remanded to the district court for entry of a judgment of acquittal. An opinion shall follow in due course."

The order, however, was rescinded and replaced on Friday. The later order still reversed Aleynikov’s conviction, but the acquittal was noticeably absent, reports Wired.

The ruling came hours after the court heard arguments in Aleynikov’s case, which is considered a test case in determining the boundaries of intellectual property crimes. Aleynikov was convicted of stealing source code from Goldman Sachs, his former employer, under the Economic Espionage Act.

The question before the Second Circuit Court of Appeals last week was whether Aleynikov actually committed a crime under the Economic Espionage Act. Kevin Marino, Aleynikov’s attorney, argued that the Act requires a theft to involve a “product designed for interstate commerce,” reports The New York Times. He claimed that the Goldman Sachs trading software at the center of the case was an internal product that never entered the stream of commerce, while federal prosecutors claimed that the Act applied because the product was used to make global trades.

The forthcoming opinion detailing the court’s reasoning behind its decision will set the tone for future Economic Espionage Act cases.

In the second big name case, U.S. v. Hsu, the Second Circuit Court of Appeals affirmed Democratic fundraiser Norman Hsu’s conviction for campaign finance law violations, holding that “in the context of Ponzi schemes, intended loss can include reinvested earnings even when those “earnings” are the illusory predicate upon which the Ponzi scheme rests.” Hsu stole more than $50 million from investors in a Ponzi scheme, according to The Associated Press.

Hillary Clinton, who benefitted from Hsu’s fundraising support, returned $800,000 to Hsu-affiliated campaign donors after Hsu was arrested in 2007, reports the AP.

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