Flash Boys: A Wall Street Revolt (31 page)

At least some part of the reason he remained oblivious to the nature of Goldman Sachs’s trading business, all of the jurors noticed, was that his heart was elsewhere. “I think passion plays a big role,” said a juror who himself had spent his entire career writing code. “The moment he started talking about coding, his eyes lit up.” Another added, “The fact that he kept trying to work on open source shit even while he was at Goldman says something about the guy.”

They didn’t all agree that what Serge had taken had no value, either to him or to Goldman. But what value it might have had in creating a new system would have been trivial and indirect. “I can guarantee you this: He did not steal code to use it on some other system,” one said, and none of the others disagreed. For my part, I didn’t fully understand why some parts of Goldman’s system might not be useful in some other system. “Goldman’s code base is like buying a really old house,” one of the jurors explained. “And you take the trouble to soup it up. But it still has the problems of a really old house. Teza was going to build a new house, on new land. Why would you take one-hundred-year-old copper pipes and put them in my new house? It isn’t that they couldn’t be used; it’s that the amount of trouble involved in making it useful is ridiculous.” A third added, “It’s
way
easier to start from scratch.” Their conviction that Goldman’s code was not terribly useful outside of Goldman grew even stronger when they learned—later, as Serge failed to mention it at the dinners—that the new system Serge planned to create was to be written in a different computer language than the Goldman code.

The perplexing question, at least to me, was why Serge had taken anything. A full month after he’d left Goldman Sachs, he still had not touched the code he had taken. If the code was so unimportant to him that he didn’t bother to open it up and study it; if most of it was either so clunky or so peculiar to Goldman’s system that it was next to useless outside Goldman—why take it? Oddly, his jurors didn’t find this hard to understand. One put it this way: “If Person A steals a bike from Person B, then Person A is riding a bike to school, and Person B is walking. Person A is better off at the expense of Person B. That is clear-cut, and most people’s view of theft.

“In Serge’s case, think of being at a company for three years, and you carry a spiral notebook and write everything down. Everything about your meetings, your ideas, products, sales, client meetings—it’s all written down in that notebook. You leave for your new job and take the notebook with you—as most people do. The contents of your notebook relate to your history at the prior company but have very little relevance to your new job. You may never look at it again. Maybe there are some ideas, or templates, or thoughts you can draw on. But that notebook is related to your prior job, and you will start a new notebook at your new job which will make the old one irrelevant. . . . For programmers, their code is their spiral notebook. [It enables them] to remember what they worked on—but it has very little relevance to what they will build next. . . . He took a spiral notebook that had very little relevance outside of Goldman Sachs.”

To the well-informed jury, the real mystery wasn’t why Serge had done what he had done. It was why Goldman Sachs had done what it had done. Why on earth call the FBI? Why exploit the ignorance of both the general public and the legal system about complex financial matters to punish this one little guy? Why must the spider always eat the fly?

The financial insiders had many theories about this: that it was an accident; that Goldman had called the FBI in haste and then realized the truth, but lost control of the legal process; that in 2009 Goldman had been on hair-trigger alert to personnel losses in high-frequency trading, because they could see how much money would be made from it, and thought they could compete in the business. The jurors all had ideas about why what had happened had happened. One of the theories was more intriguing than the others. It had to do with the nature of a big Wall Street bank, and the way people who worked for it, at the intersection of technology and trading, got ahead. As one juror put it, “Every manager of a Wall Street tech group likes to have people believe that his guys are geniuses. Russians, whatever. His whole persona among his peers is that what he and his team do can’t be replicated. When people find out that ninety-five percent of their code is open source, it kills that perception. What the guy can’t say, when he gets told Serge has taken something, is ‘it doesn’t matter what he took because it’s worse than what they’ll create on their own.’ So when the security people come to him and tell him about the downloads, he can’t say, ‘No big deal.’ And he can’t say, ‘I don’t know what he took.’ ”

To put it another way: The process that ended with Serge Aleynikov sitting inside two holding facilities that housed dangerous offenders and then a federal prison may have started with the concern of some Goldman Sachs manager with his bonus. “Who is going to pull the fire alarm before they smell the fire?” asked the juror who had advanced this last theory. “It’s always the people who are politically motivated.” As he left dinner with Serge Aleynikov and walked down Wall Street, he thought about it some more. “I’m actually nauseous,” he said. “It makes me sick.”

THE MYSTERY THE
jury of Sergey Aleynikov’s peers had more trouble solving was Serge himself. He appeared, and perhaps even was, completely at peace with the world. Had you lined up the people at those two Wall Street dinners and asked the American public to vote for the man who had just lost his marriage, his home, his job, his life savings, and his reputation, Serge would have come dead last. At one point, one of the people at the table stopped the conversation about computer code and asked, “Why aren’t you angry?” Serge just smiled back at him. “No, really,” said the juror. “How do you stay so calm? I’d be fucking going crazy.” Serge smiled again. “But what does craziness give you?” he said. “What does negative demeanor give you as a person? It doesn’t give you anything. You know that something happened. Your life happened to go in that particular route. If you know that you’re innocent, know it. But at the same time you know you are in trouble and this is how it’s going to be.” To which he added, “To some extent I’m glad this happened to me. I think it strengthened my understanding of what living is all about.” At the end of his trial, when the original jury returned with its guilty verdict, Serge had turned to his lawyer, Kevin Marino, and said, “You know, it did not turn out the way we had hoped. But I have to say, it was a pretty good experience.” It was as if he were standing outside himself and taking in the situation as an observer. “I’ve never seen anything like it,” said Marino.

In the comfort of the Wall Street cornucopia, that notion—that the hellish experience he’d been through had actually been good for him—was too weird to pursue, and the jurors had quickly returned to discussing computer code and high-frequency trading. But Serge actually believed what he had said. Before his arrest—before he lost much of what he thought important in his life—he went through his days and nights in a certain state of mind: a bit self-absorbed, prone to anxiety and worry about his status in the world. “When I was arrested, I couldn’t sleep,” he said. “When I saw articles in the newspaper, I would tremble at the fear of losing my reputation. Now I just smile. I no longer panic. Or have panic ideas that something could go wrong.” By the time he was first sent to jail, his wife had left him, taking their three young daughters with her. He had no money and no one to turn to. “He didn’t have very close friends,” his fellow Russian émigré Masha Leder recalled. “He never did. He’s not a people person. He didn’t even have anyone to be power of attorney.” Out of a sense of Russian solidarity, and out of pity, she took the job—which meant, among other things, frequent trips to visit Serge in prison. “Every time I would come to visit him in jail, I would leave energized by him,” she said. “He radiated so much energy and positive emotions that it was like therapy for me to visit him. His eyes opened to how the world really is. And he started talking to people. For the first time! He would say: People in jail have the best stories. He could have considered himself a tragedy. And he didn’t.”

By far the most difficult part of his experience was explaining what had happened to his children. When he was arrested, his daughters were five, three, and almost one. “I tried to put it in the most simple terms they would understand,” said Serge. “But the bottom line was I was apologizing for the fact that this had happened.” In jail he was allowed three hundred minutes a month on the phone—and for a long time the kids, when he called them, didn’t pick up on the other end.

The holding facility in which Serge spent his first four months was violent, and essentially nonverbal, but he didn’t find it hard to stay out of trouble there. He even found people he could talk to, and enjoy talking to. When they moved him to the minimum-security prison at Fort Dix, in New Jersey, he was still in a room crammed with hundreds of other roommates, but he now had space to work. He remained in some physical distress, mainly because he refused to eat meat. “His body, he had really bad times there,” said Masha Leder. “He lived on beans and rice. He was always hungry. I’d buy him these yogurts and he would gulp them down one after another.” His mind still worked fine, though, and a lifetime of programming in cube farms had left him with the ability to focus in prison conditions. A few months into Serge’s jail term, Masha Leder received a thick envelope from him. It contained roughly a hundred pages covered on both sides in Serge’s meticulous eight-point script. It was computer code—a solution to some high-frequency trading problem. Serge feared that if the prison guards found it, they wouldn’t understand it, decide that it was suspicious, and confiscate it.

A year after he’d been sent away, the appeal of Serge Aleynikov was finally heard, by the Second Circuit Court of Appeals. The judgment was swift, unlike anything his lawyer, Kevin Marino, had seen in his career. Marino was by then working gratis for a client who was dead broke. The very day he made his argument, the judges ordered Serge released, on the grounds that the laws he stood accused of breaking did not actually apply to his case. At six in the morning on February 17, 2012, Serge received an email from Kevin Marino saying that he was to be freed.

A few months later, Marino noticed that the government had failed to return Serge’s passport. Marino called and asked for it back. The passport never arrived; instead Serge, now staying with friends in New Jersey, was arrested again and taken to jail. Once again, he had no idea what he was being arrested for, but this time neither did the police. The New Jersey cops who picked him up didn’t know the charges, only that he should be held without bail, as he was deemed a flight risk. His lawyer was just as perplexed. “When I got the call,” said Marino, “I thought it might have something to do with Serge’s child support.” It didn’t. A few days later, Manhattan district attorney Cyrus Vance sent out a press release to announce that the State of New York was charging Serge Aleynikov with “accessing and duplicating a complex proprietary and highly confidential computer source code owned by Goldman Sachs.” The press release went on to say that “[t]his code is so highly confidential that it is known in the industry as the firm’s ‘secret sauce,’ ” and thanked Goldman Sachs for its cooperation. The prosecutor assigned to the case, Joanne Li, claimed that Serge was a flight risk and needed to be re-jailed immediately—which was strange, because Serge had gone to and returned from Russia between the time of his first arrest and his first jailing. (It was Li who soon fled the case—to a job at Citigroup.)

Marino recognized the phrase “secret sauce.” It hadn’t come from “the industry” but from his opening statement in Serge’s first trial, when he mocked the prosecutors for treating Goldman’s code as if it were some “secret sauce.” Otherwise Serge’s re-arrest made no sense to him. To avoid double jeopardy, the Manhattan DA’s office had found new crimes with which to charge Serge for the same actions. But the sentencing guidelines for the new crimes meant that, even if he was convicted, it was very likely he wouldn’t have to return to jail. He’d already served time, for crimes the court ultimately determined he had not committed. Marino called Vance’s office. “They told me that they didn’t need him to be punished anymore, but they need him to be held accountable,” said Marino. “They want him to plead guilty and let him go on time served. I told them in the politest terms possible that they can go fuck themselves. They ruined his life.”

Oddly enough, they hadn’t. “Inside of me I was completely witnessing,” said Serge, about the night of his re-arrest. “There was no fear, no panic, no negativity.” His children had reattached themselves to him, and he had a new world of people to whom he felt close. He thought he was living his life as well as it had ever been lived. He’d even started a memoir, to explain what had happened to anyone who might be interested. He began:

If the incarceration experience doesn’t break your spirit, it changes you in a way that you lose many fears. You begin to realize that your life is not ruled by your ego and ambition and that it can end any day at any time. So why worry? You learn that just like on the street, there is life in prison, and random people get there based on the jeopardy of the system. The prisons are filled by people who crossed the law, as well as by those who were incidentally and circumstantially picked and crushed by somebody else’s agenda. On the other hand, as a vivid benefit, you become very much independent of material property and learn to appreciate very simple pleasures in life such as the sunlight and morning breeze.

EPILOGUE

RIDING THE WALL STREET TRAIL

F
or at least a few members of the Women’s Adventure Club of Centre County, Pennsylvania, the weather was never much of an issue. The Women’s Adventure Club had been created by Lisa Wandel, an administrator at Penn State University, after she realized that many women were afraid to hike alone in the woods. The club now had more than seven hundred members, and its sense of adventure had expanded far beyond a walk in the woods. Between them the four women who met me on their bicycles beside the Pennsylvania road had: learned the flying trapeze, swum the Chesapeake Bay, and won silver at the downhill mountain biking world championships; they had finished a road bike race called the Gran Fondo “Masochistic Metric,” a footrace called the Tough Mudder, and three separate twenty-four-hour-long mountain bike races; they had graduated from race car driving school and made thirteen Polar Bear Plunges in some local river in the dead of winter. After studying the Women’s Adventure Club’s website, Ronan had said, “It’s a bunch of lunatic women who meet up and do dangerous shit; I got to get my wife into it.”