Thinking Tech

The case of the stolen Goldman software

The case of the stolen Goldman software

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Aleynikov announced he was quitting a few weeks ago to join a firm in Chicago, for three times the money. He then allegedly moved 32 megabytes to a server in Germany and tried to erase his tracks from the Goldman computer record, working from both his home and the office.

It reads like the first chapter of a William Gibson novel. (That's Gibson to the left.)

A Russian immigrant is arrested at Newark Airport and charged with theft of trade secrets in the form of software.

But these are no ordinary secrets. The immigrant is a former Goldman Sachs vice president and the software is the trading company's "secret sauce," a system it uses to earn millions of dollars each year for its clients, partners and shareholders.

The accused, Sergey Aleynikov, is 39 and an accomplished ballroom dancer. New York Magazine scared up proof of that, along with a denial of the charges from his wife, and the statement that he's been a good American for 20 years.

Maybe too good.

Aleynikov announced d he was quitting a few weeks ago to join a firm in Chicago, for three times the money. He then allegedly moved 32 megabytes to a server in Germany and tried to erase his tracks from the Goldman computer record, working from both his home and the office.

Aleynikov's story is quite different. It was open source stuff he wanted for his new job, he said, and any other downloads were accidental.

Here's where it gets good.

The Web site Zero Hedge found legal documents from a 1997 civil case in California naming a Sergei Aleynikov, a charge of trademark infringement brought by the owners of the game show Wheel of Fortune.

A Kansas City site called the Pitch writes that a co-defendant in that case, Leonid Ivanutenko, also ran a firm called Express Shipping Services that was named as a front for the Russian mafia in a separate case.

That 1997 case involved an effort to copy the game show Wheel of Fortune as an online game called Fortune Wheel, which was finally shut down in 1998 after a complaint to its Web host.

A third defendant in that case, Vadim Resyev, had an alias of Vadim Arefiev. I may be talking here about a different person, but Linked In lists a Vadim Arefiev as a senior developer and system analyst at Merrill Lynch.

Small world, especially if this Arefiev is the same Arefiev whom Aleynikov previously worked with. Although it is possible neither ever met or did business with Ivanutenko a decade ago. For all I know those names are as common in Russia as Smith, Jones and Brown are here. What I have given, in the previous five paragraphs, is pure speculation based on a littie Googling.

But it makes a great story.

Security expert Bruce Schneier told The New York Times Goldman made all the right moves in this case, but if Russian gangsters got the Aleynikov code from Germany then Goldman's trading secrets may be blown anyway.

Since the arrest happened Friday the question needs to be asked. Assuming the Sergei Aleynikov arrested at Newark is the same Sergei Aleynikov who tried to steal Wheel of Fortune with a mobbed-up partner, did President Obama bring this up with President Putin in their meetings earlier today?

If Goldman Sachs' trading secrets are now in the hands of Russian gangsters, who benefits? How much cooperation will Russia offer in cracking the case, and what might that mean for bilateral relations?

And what about Goldman Sachs? We're talking about a company that drew tens of billions in bailout money, whose executives have directed American economic policy for years. How could they employ someone with Aleynikov's track record in the first place? Is there something deeper going on?

I'm sure Mr. Gibson can handle the rest much better than I can.

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Dana Blankenhorn

Contributing Editor

Contributing Editor Dana Blankenhorn has written for the Chicago Tribune, Advertising Age's "NetMarketing" supplement and founded the Interactive Age Daily for CMP Media. He holds degrees from Rice and Northwestern universities. He is based in Atlanta. Follow him on Twitter. Disclosure