United States Court of Appeals

Transcription

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11-1074
To Be Argued By:
DANIEL W. LEVY
United States Court of Appeals
FOR THE SECOND CIRCUIT
Docket No. 11-1074
UNITED STATES OF AMERICA,
Appellee,
—v.—
SAMARTH AGRAWAL,
Defendant-Appellant.
ON APPEAL
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
FROM THE
FOR THE
BRIEF FOR THE UNITED STATES OF AMERICA
PREET BHARARA,
United States Attorney for the
Southern District of New York,
Attorney for the United States
of America.
THOMAS G.A. BROWN,
DANIEL W. LEVY,
JUSTIN S. WEDDLE,
Assistant United States Attorneys,
Of Counsel.
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TABLE OF CONTENTS
PAGE
Preliminary Statement. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Statement of Facts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
A. The Indictment. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
B. The Trial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1. The Government’s Case. . . . . . . . . . . . . . . . . 7
a. High Frequency Trading. . . . . . . . . . . . . . 7
b. SocGen’s HFT Systems.. . . . . . . . . . . . . . 8
c. Agrawal’s Employment at SocGen. . . . . . 9
d. Agrawal Gets a Job at Tower and
Prints SocGen’s HFT Code. . . . . . . . . . . 11
e. Agrawal Deletes Incriminating
Documents from His Computer and
Resigns from SocGen. . . . . . . . . . . . . . . 17
f. Agrawal Discloses Details of
SocGen’s HFT Systems to Tower. . . . . . 18
g. Agrawal’s Arrest, Post-Arrest
Statements, and the Search of
Agrawal’s Apartment. . . . . . . . . . . . . . . 19
2. The Defense Case. . . . . . . . . . . . . . . . . . . . . 20
C. The Charge Conference and the Jury
Instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
D. The Sentencing Proceeding. . . . . . . . . . . . . . . . 28
A RGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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P OINT I — The District Court Properly Instructed the
Jury. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
A. Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . 32
B. Discussion.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
1. Agrawal’s Claims Are Subject to Plain
Error Review. . . . . . . . . . . . . . . . . . . . . . . . . 34
2. Agrawal Does Not Satisfy the Plain Error
Standard on Appeal.. . . . . . . . . . . . . . . . . . . 36
a. Count One — Instruction as to Intent. . . 36
b. Count One — Instruction as to
Knowledge.. . . . . . . . . . . . . . . . . . . . . . . 40
c. Count Two — Instruction as to
“Goods, Wares, or Merchandise”. . . . . . 42
d. Count Two — Instruction as to
Interstate or Foreign Commerce. . . . . . . 42
e. Count Two — Instruction as to
Determining the Value of the Code.. . . . 44
P OINT II — There Was No Constructive Amendment
of the Indictment. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
A. Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . 46
B. Discussion.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
P OINT III — Agrawal’s Conduct Violates the EEA
and the NSPA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
A. Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . 56
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B. Discussion.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
1. Count One — Theft of Trade Secrets. . . . . . 57
2. Count Two — Interstate Transportation
of Stolen Property. . . . . . . . . . . . . . . . . . . . . 62
3. Agrawal’s Sufficiency Claim Fails. . . . . . . . 66
C ONCLUSION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
TABLE OF AUTHORITIES
Cases:
Alstate Const. Co. v. Durkin,
345 U.S. 13 (1953).. . . . . . . . . . . . . . . . . . . . . . . . 61
Boyle v. United States,
556 U.S. 938, 129 S. Ct. 2237 (2009). . . . . . . . . . 56
California v. Brown,
479 U.S. 538 (1987).. . . . . . . . . . . . . . . . . . . . . . . 32
Caminetti v. United States,
242 U.S. 470 (1917).. . . . . . . . . . . . . . . . . . . . . . . 56
Dowling v. United States,
473 U.S. 207 (1985).. . . . . . . . . . . . . . . . . . . . . . . 65
Henderson v. Kibbe,
431 U.S. 145 (1977).. . . . . . . . . . . . . . . . . . . . . . . 34
Holland v. United States,
348 U.S. 121 (1954).. . . . . . . . . . . . . . . . . . . . . . . 32
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Jackson v. Virginia,
443 U.S. 307 (1979).. . . . . . . . . . . . . . . . . . . . . . . 67
Neder v. United States,
527 U.S. 1 (1999).. . . . . . . . . . . . . . . . . . . . . . . . . 34
Puckett v. United States,
556 U.S. 129 (2009).. . . . . . . . . . . . . . . . . . . . . . . 33
United States v. Alavi,
No. 07 Cr. 429 (PHX),
2008 WL 1971391 (D. Ariz. May 2, 2008). . . . . . 63
United States v. Albertini,
472 U.S. 675 (1985).. . . . . . . . . . . . . . . . . . . . . . . 56
United States v. Aleynikov,
737 F. Supp. 2d 173 (S.D.N.Y. 2010). . . . . . . . . . 55
785 F. Supp. 2d 46 (S.D.N.Y. 2011). . . . . . . . . . . 55
No. 11-1126-cr. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
United States v. Alkins,
925 F.2d 541 (2d Cir. 1991).. . . . . . . . . . . . . . . . . 32
United States v. Bottone,
365 F.2d 389 (2d Cir. 1966).. . . . . . . . . . . . . . . 63-64
United States v. Brown,
925 F.2d 1301 (10th Cir. 1991). . . . . . . . . . . . . . . 65
United States v. Brunshtein,
344 F.3d 91 (2d Cir. 2003).. . . . . . . . . . . . . . . . . . 34
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PAGE
United States v. Caparros,
No. 85 Cr. 990 (JFK),
1987 WL 8653 (S.D.N.Y. Mar. 25, 1987). . . . . . . 63
United States v. Carr,
880 F.2d 1550 (2d Cir. 1989).. . . . . . . . . . . . . . . . 32
United States v. Chavez,
549 F.3d 119 (2d Cir. 2008).. . . . . . . . . . . . . . . . . 66
United States v. D'Amelio,
636 F. Supp. 2d 234 (S.D.N.Y. 2009). . . . . . . . . . 26
United States v. Danielson,
199 F.3d 666 (2d Cir. 1999). . . . . . . . . . . . . . . . . 46
United States v. Diaz,
176 F.3d 52 (2d Cir. 1999).. . . . . . . . . . . . . . . . . . 67
United States v. Dupre,
462 F.3d 131 (2d Cir. 2006).. . . . . . . . . . . . . . 48, 53
United States v. Farraj,
142 F. Supp. 2d 484 (S.D.N.Y. 2001). . . . . . . . . . 63
United States v. Frank,
156 F.3d 332 (2d Cir. 1997).. . . . . . . . . . . . . . . . . 46
United States v. Gaskin,
364 F.3d 438 (2d Cir. 2004).. . . . . . . . . . . . . . . . . 66
United States v. Genovese,
409 F. Supp. 2d 253 (S.D.N.Y. 2005). . . . . . . . . . 37
United States v. Greenwald,
479 F.2d 320 (6th Cir. 1973). . . . . . . . . . . . . . . . . 64
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United States v. Hassan,
578 F.3d 108 (2d Cir. 2008).. . . . . . . . . . . . . . . . . 66
United States v. Heimann,
705 F.2d 662 (2d Cir. 1983).. . . . . . . . . . . . . . . . . 47
United States v. Hsu,
155 F.3d 189 (3rd Cir. 1998). . . . . . . . . . . . . . . . . 37
United States v. Ionia Mgmt.,
555 F.3d 303 (2d Cir. 2009).. . . . . . . . . . . . . . . . . 46
United States v. Jones,
30 F.3d 276 (2d Cir. 1994).. . . . . . . . . . . . . . . . . . 32
United States v. Klein,
Nos. 05-3443-cr(L), 05-4199-cr(CON),
2007 WL 419659 (2d Cir. Feb. 5, 2007). . . . . . . . 53
United States v. Kwan,
No. 02Cr. 241 (DAB),
2003 WL 22973515 (S.D.N.Y. Dec. 17, 2003). . . 64
United States v. Marcus,
130 S. Ct. 2159 (2010). . . . . . . . . . . . . . . . . . . . . . 34
United States v. Martin,
228 F.3d 1 (1st Cir. 2000). . . . . . . . . . . . . . . . . . . 65
United States v. Masotto,
73 F.3d 1233 (2d Cir. 1996).. . . . . . . . . . . . . . . . . 33
United States v. McCourty,
562 F.3d 458 (2d Cir. 2009).. . . . . . . . . . . . . . . . . 47
United States v. McDermott,
918 F.2d 319 (2d Cir. 1990).. . . . . . . . . . . . . . . . . 48
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United States v. Middlemiss,
217 F.3d 112 (2d Cir. 2000).. . . . . . . . . . . . . . . . . 33
United States v. Miller,
471 U.S. 130 (1985).. . . . . . . . . . . . . . . . . . . . . . . 47
United States v. Morgenstern,
933 F.2d 1108 (2d Cir. 1991).. . . . . . . . . . . . . . . . 47
United States v. Mucciante,
21 F.3d 1228 (2d Cir. 1994).. . . . . . . . . . . . . . . . . 48
United States v. Mulder,
273 F.3d 91 (2d Cir. 2001).. . . . . . . . . . . . . . . . . . 32
United States v. Patino,
962 F.2d 263 (2d Cir. 1992).. . . . . . . . . . . . . . . 46-48
United States v. Piervinanzi,
23 F.3d 670 (2d Cir. 1994).. . . . . . . . . . . . . . . . . . 65
United States v. Pirro,
212 F.3d 86 (2d Cir. 2000).. . . . . . . . . . . . . . . . 56-57
United States v. Pujana-Mena,
949 F.2d 24 (2d Cir. 1991).. . . . . . . . . . . . . . . . . . 32
United States v. Rigas,
490 F.3d 208 (2d Cir. 2007).. . . . . . . . . . . . . . . 46-47
United States v. Riggs,
739 F. Supp. 414 (E.D. Ill. 1990), aff'd on
other grounds, 967 F.2d 561 (11th Cir. 1992). . . . 64
United States v. Ron Pair Enterprises, Inc.,
489 U.S. 235 (1989).. . . . . . . . . . . . . . . . . . . . . . . 56
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United States v. Salmonese,
352 F.3d 608 (2d Cir. 2003).. . . . . . . . . . . . . . . 46-47
United States v. Seagraves,
265 F.2d 876 (3d Cir. 1959).. . . . . . . . . . . . . . . . . 64
United States v. Shaoul,
41 F.3d 811 (2d Cir. 1994).. . . . . . . . . . . . . . . . . . 33
United States v. Tropeano,
252 F.3d 653 (2d Cir. 2001).. . . . . . . . . . . . . . . . . 33
United States v. Wallace,
59 F.3d 333 (2d Cir. 1995).. . . . . . . . . . . . . . . . 46-47
United States v. Whitten,
610 F.3d 168 (2d Cir. 2010).. . . . . . . . . . . . . . . . . 43
United States v. Yang,
281 F.3d 534 (6th Cir. 2002). . . . . . . . . . . . . . . . . 59
United States v. Zingaro,
858 F.2d 94 (2d Cir. 1988).. . . . . . . . . . . . . . . . . . 47
In re Vericker,
446 F.2d 244 (2d Cir. 1971).. . . . . . . . . . . . . . . . . 63
Victor v. Nebraska,
511 U.S. 1 (1994).. . . . . . . . . . . . . . . . . . . . . . . . . 32
Statutes, Rules & Other Authorities
Anti-Drug Abuse Act of 1988, Pub. L. 100-690,
§ 7057(a), 102 Stat. 4181, 4402 (1988). . . . . . . . . 65
Economic Espionage Act of 1996,
18 U.S.C. § 1832. . . . . . . . . . . . . . . . . . 5, 22, 51, 57
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Fair Labor Standards Act,
29 U.S.C. § 201 et seq. . . . . . . . . . . . . . . . . . . . . . 61
Fed. R. Crim. P. 30(d). . . . . . . . . . . . . . . . . . . . . . . . . 33
H.R. Rep. No. 104-788 (1996),
as reprinted in 1996 U.S.C.C.A.N. 4021 . . . . . 59-62
S. Rep. 104-359 (1996),
1996 WL 497065. . . . . . . . . . . . . . . . . . . . . . . . . . 60
Statement by President William J. Clinton
upon Signing H.R. 3723, 32 Weekly Comp.
Pres. Doc. 2040 (Oct. 14, 1996), as reprinted
in 1996 U.S.C.C.A.N. 4034. . . . . . . . . . . . . . . . . . 60
Opening Statement of Sen. Arlen Specter in
S. Hrg. 104-499 (1996), 1996 WL 90824. . . . . . . 59
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FOR THE SECOND CIRCUIT
Docket No. 11-1074
U NITED S TATES OF A MERICA,
Appellee,
-v.S AMARTH A GRAWAL,
Defendant-Appellant.
BRIEF FOR THE UNITED STATES OF AMERICA
Preliminary Statement
Samarth Agrawal appeals from a judgment of conviction entered on March 10, 2011, in the United States
District Court for the Southern District of New York,
following an eight-day trial before the Honorable Jed S.
Rakoff, United States District Judge, and a jury.
Indictment 10 Cr. 417 (JSR)* (the “Indictment”) was
filed on May 13, 2010, in two counts. Count One charged
*
The case was originally assigned to the Honorable
John G. Koeltl, United States District Judge, but was reassigned to Judge Rakoff prior to trial.
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Agrawal with theft of trade secrets, in violation of Title
18, United States Code, Sections 1832(a)(2) and (a)(4),
and 2. Count Two charged Agrawal with interstate transportation of stolen property, in violation of Title 18,
United States Code, Sections 2314 and 2.
Trial commenced on November 8, 2010, and ended on
November 19, 2010, when the jury returned a guilty
verdict on both counts of the Indictment.
On February 28, 2011, the District Court sentenced
Agrawal to concurrent terms of 36 months’ imprisonment
on the two counts of conviction, to be followed by two
years’ supervised release, and imposed a mandatory $200
special assessment.
Agrawal filed a timely notice of appeal on March 10,
2011.
Agrawal is currently serving his sentence.
Statement of Facts
A. The Indictment
The eight-page Indictment filed in this case contained
detailed allegations as to the offenses with which Agrawal
was charged. In Count One, the Indictment alleged by way
of background that from about March 2007 through
November 17, 2009, when he resigned, Agrawal, a
resident of New Jersey, worked as a “quantitative analyst”
and then as a “trader” in the New York offices of a
particular financial institution (later identified as the
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French bank Société Générale (“SocGen”)). (A. 9).* As
further alleged as background in Count One, Agrawal was
responsible for, among other things, adjusting trading
algorithms in computer code that were used by SocGen to
conduct so-called high frequency trading (“HFT”) — that
is, sophisticated, high-volume, extremely rapid trades —
on various financial markets. (A. 10). The Indictment in
Count One alleged that SocGen had invested millions of
dollars to develop and maintain a computerized HFT
system, which generated millions of dollars in profits per
year, and that SocGen took elaborate steps to protect the
computer code underlying the HFT system from unauthorized copying, removal or transfer. (A. 11-12). The
Indictment in Count one alleged that SocGen’s HFT
system was divided into distinct units, each of which
executed different types of trades. (A. 11).
The Indictment in Count One also alleged that on June
12, 2009, Agrawal was granted access to and received a
copy of the computer code for the particular unit of
SocGen’s HFT system (later identified as “DQS”) for
which he was responsible. On the same day, Agrawal also
*
“A.” refers to the Joint Appendix; “Tr.” refers to
the transcript of the trial; “[DATE] Tr.” refers to the
transcripts of proceedings that occurred on other dates;
“GX” refers to exhibits introduced at trial by the
Government; “Br.” refers to Agrawal’s brief on appeal;
“Add.” refers to the Addendum to this brief; and “PSR”
refers to the Presentence Investigation Report prepared by
the United States Probation Office in connection with
Agrawal’s sentencing.
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received a copy of the computer code for another unit of
SocGen’s HFT system (later identified as “ADP”) for
which he was not responsible and to which he was not
granted access. (A. 12-13).
The Indictment in Count One alleged that starting the
very next day, Saturday, June 13, 2009, and also on days
in August and September, Agrawal printed out code for
both DQS and ADP. (A. 13). In April 2010, printouts of
SocGen’s HFT code were found in Agrawal’s bedroom at
his apartment in New Jersey. (A. 14).
The Indictment in Count One alleged that Agrawal
resigned from SocGen on November 17, 2009. Prior to
that time, the Indictment alleged that:
17.
Starting in or about mid-2009,
SAMARTH AGRAWAL, the defendant,
had been in employment negotiations with
[a new potential employer, Tower Research
Capital (“Tower”)]. AGRAWAL was
scheduled to accept formally an offer of
employment at [Tower’s] offices on or
about April 19, 2010. AGRAWAL had been
offered a base salary, a signing bonus, and a
guaranteed first year bonus, for a total of
hundreds of thousands of dollars.
18.
Prior to accepting the offer,
SAMARTH AGRAWAL, the defendant,
had met with employees of [Tower] to
discuss the details of a trading system
AGRAWAL intended to develop at
[Tower]. AGRAWAL had provided hand-
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written notes to employees of [Tower] that
related to the trading system AGRAWAL
was proposing to develop. Those handwritten notes described, among other things,
features of [SocGen’s HFT code] and features of the system architecture of
[SocGen’s HFT trading system].
(A. 14-15).
Under the heading “Statutory Allegations” in Count
One, the count charging theft of trade secrets in violation
of the Economic Espionage Act (the “EEA”), 18 U.S.C.
§ 1832(a)(2) and (a)(4), the Indictment charged that:
19.
From at least on or about June 12,
2009, up through and including in or about
April 2010, in the Southern District of New
Y o rk a n d elsew here, S A M A R T H
AGRAWAL, the defendant, unlawfully,
willfully, and knowingly, without authorization copied, duplicated, sketched, drew,
photographed, downloaded, uploaded,
altered, destroyed, photocopied, replicated,
transmitted, delivered, sent, mailed, communicated, and conveyed a trade secret, as that
term is defined in Title 17, United States
Code, Section 1839(3), with intent to convert such trade secret, that was related to
and included in a product that was produced
for and placed in interstate and foreign
commerce, to the economic benefit of someone other than the owner thereof, and intending and knowing that the offense would
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injure the owner of that trade secret, to wit,
AGRAWAL, while in New York, New
York, without authorization copied, printed
and removed from the offices of [SocGen]
proprietary computer code for [SocGen’s]
high frequency trading business, with the
intent to use that code for the economic
benefit of himself and others.
(A. 15-16).
With respect to Count Two, the count charging interstate transportation of stolen property in violation of the
National Stolen Property Act (“NSPA”), 18 U.S.C. § 2314,
the Indictment repeated and realleged the allegations in
paragraphs 1 through 18 of the Indictment, and charged as
follows:
20.
From at least on or about June 12,
2009, up through and including in or about
April 2010, in the Southern District of New
Y o rk a n d e ls e w h ere, S A M A R T H
AGRAWAL, the defendant, unlawfully,
willfully, and knowingly, transported, transmitted, and transferred in interstate and
foreign commerce goods, wares, merchandise, securities, and money, of the value of
$5,000 and more, knowing the same to have
been stolen, converted and taken by fraud,
to wit, AGRAWAL, while in New York,
New York, without authorization, removed
from the offices of [SocGen] proprietary
computer code for [SocGen’s] high frequency trading business, the value of which
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exceeded $5,000, and brought that stolen
code to his home in Jersey City, New Jersey.
(A. 16).
B. The Trial
1. The Government’s Case
The Government’s proof at trial consisted of, among
other things, the testimony of SocGen and Tower employees and of an expert on high frequency trading; printouts
of code and handwritten notes recovered from Agrawal’s
bedroom in his Jersey City, New Jersey apartment; handwritten notes that had been in the possession of Tower
employees; recordings of meetings between Agrawal and
Tower employees; video recordings and computer logs
showing Agrawal’s copying, printing, and removal of the
code;and various employment contracts and confidentiality
agreements between Agrawal and SocGen.
a. High Frequency Trading
That evidence showed that high-frequency trading
(“HFT”) is a type of trading carried out in financial
markets, such as the New York Stock Exchange, in which
orders to buy and sell securities are placed electronically.
Typically, high-frequency trading involves the extremely
rapid execution of a high volume of trades determined by
sophisticated computer programs. These computer programs use complex mathematical formulas, known as
algorithms, to make and execute the trading decisions.
These computer-generated trading decisions are based
upon, among other things, statistical analyses of past
trades, including “indicators,” which are mathematical
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formulae that are used to predict the future prices of stocks
and other securities; and moment-to-moment developments in the markets. Speed is crucial to the functioning of
an HFT system and the advantages of one system over
another are measured in milliseconds or, in some instances, in microseconds (i.e., millionths of a second).
(Tr. 299-318). Secrecy is also paramount because if one
competitor used another’s HFT system, including, for
example, its algorithms or indicators, the value of the HFT
system is diminished because the HFT’s speed advantage
may be lost and because both competitors would attempt
to exploit the same trading opportunities at the same time,
reducing profitability. (Tr. 55-56, 71-72, 107, 162, 268,
336, 615, 703-04). Various financial institutions engage in
high-frequency trading. (PSR ¶ 6; Tr. 299-318).
b. SocGen’s HFT Systems
Société Générale (“SocGen”) was a French financial
institution, which had New York offices where it maintained a High Frequency Trading Group (the “HFT
Group”). During the time period relevant to the Indictment, SocGen employed two principal HFT systems called
“ADP” and “DQS,” which each used a process called
“index arbitrage” to identify and profit from minute and
temporary differences in the prices of various stocks and
other securities. (Tr. 492, 667-68, 673, 677-86). Although
ADP and DQS each engaged in index arbitrage, they were
distinct trading strategies. (Tr. 1037). Both of these
systems were made up of highly complicated computer
code that had been written and refined over the course of
years by employees of SocGen. (GX 7-8; Tr. 597-601).
ADP and DQS were highly profitable, generating well
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more than $10 million of profit for SocGen in each of the
years 2007, 2008, and 2009. (Tr. 613). ADP and DQS cost
close to $10 million to develop. (Tr. 1044-45; PSR ¶ 23).
SocGen took extensive measures to protect the secrecy
of the code for its HFT systems — and therefore their
value and profitability — by, among other things: requiring SocGen employees to confirm their understanding and
agreement with SocGen’s compliance manuals, which
included detailed policies on maintaining the secrecy of
proprietary information (GX 4A-4G, 5); password protecting SocGen’s computer systems (Tr. 776); storing the code
for DQS, ADP, and other HFT systems on a special
computer server requiring a special password (Tr. 378-79);
providing access to the code to only those with a need to
know (Tr. 381-38, 455, 1046); logging activity on its
computer network (Tr. 779-80); and installing surveillance
cameras in the area around the HFT Group’s desk. (GX
401, 402). In addition, SocGen ensured that the computers
used by those with access to the computer code underlying
the HFT systems had no ability to copy information onto
disks or other storage media.* (Tr. 779-80).
c.
Agrawal’s Employment at SocGen
In early 2007, Agrawal began working at SocGen’s
New York offices as a “quantitative analyst” in SocGen’s
HFT Group. (GX 1, 7). Specifically, Agrawal worked on
developing new “indicators” for DQS. He had no role with
*
Indeed, the only way to remove HFT code from
SocGen’s offices was to physically print it out and carry it
away, which is what Agrawal did, as described below.
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respect to ADP. As set forth more fully below, Agrawal
had no access to the underlying code for either DQS or
ADP until June 2009. (Tr. 369-71, 379-81, 616).
In about April 2009, Agrawal was promoted from
“quantitative analyst” to “trader” for DQS. This promotion
meant that Agrawal assumed charge of the DQS system’s
day-to-day operations. (GX 7-8; Tr. 371-76, 462). As the
trader for DQS, Agrawal still had no role with respect to
ADP. Upon his promotion, and to improve his understanding of the DQS system, Agrawal worked for several hours
per week with two SocGen computer programmers,
Dominic Thuillier and Richad Idris. During these meetings, Thuillier — who had written the underlying computer code for DQS — made notes and diagrams for
Agrawal that resembled what Agrawal ultimately provided
to a prospective employer, Tower Research Capital, as
detailed below. (Tr. 374-77, 617-19; see, e.g., GX 509).
By July 2009, SocGen was paying Agrawal a base salary
of $102,000, guaranteed special payments of $130,000 in
October 2009 and October 2010, as well as a discretionary
bonus, for his work as DQS trader. (GX 3).
In connection with his employment at SocGen,
Agrawal agreed to abide by various ethical standards,
policies, procedures, and rules set out in SocGen’s compliance manuals. (GX 2, 4A-4D). Among other things,
Agrawal agreed that he would not, during his employment
or after, “disclose or furnish to any entity . . . any confidential or proprietary information of [SocGen].” (GX 2).
He also agreed that, upon his termination, he would return
all documents, papers, files, and other materials in his
possession that were connected to SocGen. (GX 2). Over
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the course of his employment at SocGen, Agrawal periodically renewed his commitment to abide by these compliance manuals, including in January, February, and September 2009, the year during which, as set forth more fully
below, he stole HFT code from SocGen. (GX 4E, 4F, 4G,
5).
d. Agrawal Gets a Job at Tower and
Prints SocGen’s HFT Code
Agrawal had been looking for a job outside of SocGen
for several months by the time he was promoted to DQS
trader in April 2009. In January 2009, a recruiter identified
an employment opportunity at one of SocGen’s competitors in high frequency trading, Tower Research Capital
(“Tower”). (GX 701-02). In a June 3, 2009 email, the
recruiter provided feedback from an interview Agrawal
had at Morgan Stanley, another SocGen competitor. The
recruiter stressed to Agrawal that he needed to have
proprietary information and to make that fact clear to
prospective employers. (GX 706).
A few days later, on June 8, 2009, Agrawal met with a
partner at Tower, Prashant Lal, who had learned about
Agrawal from a friend. Lal and other Tower partners were
interested in Agrawal because they knew he was working
on high frequency index arbitrage trading at SocGen.
(Tr. 70-77, 169, 672-73; GX 608). During that meeting,
Agrawal claimed that he was “running” on a day-to-day
level one of SocGen’s two HFT index arbitrage strategies
(referring to either DQS or ADP) and making improvements to it, and that he had a “complete understanding” of
it. (Tr. 74-77). Agrawal also told Lal that he wanted to
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build at Tower a strategy that was “very similar” to what
he was running at SocGen. (Tr. 77-79).
On June 10, 2009, two days after the initial meeting,
Lal sent Agrawal an e-mail to arrange another meeting at
which Lal proposed that they “go over your requirements
in more detail — particularly the data/operational requirements of parts of your strategy or any inputs to your
strategy that you are not very familiar with.” (GX 612).
Although Agrawal’s promotion to DQS trader justified
his access to DQS’s underlying computer code, he did not
obtain that access until after these communications with
Tower. On the afternoon of June 12, 2009, Idris, at the
direction of Agrawal’s supervisor, Marc Buchdahl, gave
Agrawal that access by copying the code for DQS to a
shared folder from which Agrawal could retrieve the data.
(Tr. 381-38, 1046; GX 101, 401). At the same time, Idris
mistakenly copied the code for other SocGen HFT strategies, including ADP, onto the shared folder. Because
Agrawal’s role was limited to DQS, Agrawal had no
legitimate need to access SocGen’s other strategies.
(Tr. 405-07, 445-46).
On the very next day, Saturday, June 13, 2009,
Agrawal entered SocGen’s offices in Midtown Manhattan
and spent several hours printing out over a thousand pages
of significant parts of the DQS code. Agrawal did so by
first converting the code into Microsoft Word documents
which he gave generic names, such as “0.doc,” “1.doc,”
“2.doc,” and “3.doc.” Agrawal then put the more than one
thousand pages of printed code into his backpack and left
SocGen’s Manhattan offices. (Tr. 470-86, 630-38; GX 15,
201, 201-B, 202-06, 208, 402, 902-06). As set forth below,
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Federal Bureau of Investigation agents found these
documents, among other material, in Agrawal’s apartment
in Jersey City, New Jersey on the day of his arrest in April
2009.
The following week, on June 16, 2009, Agrawal met
again with partners at Tower, including Lal, to discuss
what Agrawal needed to do to clone SocGen’s HFT
strategies at Tower. (Tr. 81-82; GX 613).
On or about July 10, 2009, Lal and other Tower
partners offered Agrawal a job at Tower, where they
understood he would build copies of SocGen HFT systems
using substantially the same algorithms and indicators.
(Tr. 78-79, 104-07, 454-55, 488-90, 677-78, 735-36). In
particular, Tower offered to pay Agrawal a base salary of
$150,000, a signing bonus of $125,000, and a guaranteed
bonus of $300,000. (PSR ¶ 14). In addition, Agrawal was
to be paid 20% of the profits generated by the strategy that
he was running at SocGen (DQS) and that he would help
replicate at Tower, plus 10% of the other strategy from
SocGen (ADP) that he was also to help replicate at Tower.
(Tr. 84-86, 105). Based on the Tower partners’ estimate
that, if functional, the principal strategy that Agrawal was
bringing to Tower would have earned $30 to $40 million
over time (Tr. 678), Agrawal stood to receive significantly
more compensation at Tower by replicating SocGen’s
strategies than he would by working at SocGen.
In early September 2009, Agrawal printed out even
more code at SocGen’s New York offices, this time for
ADP, the system to which he was mistakenly given access.
As before, Agrawal used generic file names, such as
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“1.doc,” and printed out hundreds of pages of ADP code.
(GX 201, 209, 915; Tr. 648-49, 961, 1083).
In late September and early October 2009, Agrawal
had two meetings with Tower partners to discuss the
system that he wanted to transfer from SocGen to Tower.
Both of the meetings were recorded by one of the Tower
partners. (GX 504, 506). The recordings clearly show that
Agrawal not only intended to replicate SocGen’s HFT
strategy at Tower, but he also stated that he intended to use
his remaining time at SocGen to learn additional information about SocGen’s strategy that he could bring to Tower.
For example, Agrawal had the following discussion
with Tower partners during the September 2009, meeting:
AGRAWAL: So the way [SocGen] works .
. . is the way we will start it. I don’t want to
. . . change a lot. But it is not the best system. . . . We will improvise it. I think David
[Faucon, the leader of SocGen’s HFT Group
prior to April 2009] is coming to a beta
version. . . . Um, so the way it is right now
is that we, we have a very cute little
meta-automaton in the center.
***
AGRAWAL: Because I am coming to you
in a very good faith, the reason being that I
know my upside at SocGen, in the next
three four years. I think next year they will
promote me, give me some money, shares,
and what not. They are also scared . . . .
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(laughter)
[TOWER PARTNER]: They should be . . .
AGRAWAL: They are very scared of me
leaving them. Everyday they give me some
indication that they will take care of me. But
I know I want to move now, so my bent of
mind is I don’t give a damn what they do.
***
[TOWER PARTNER]: . . . so can you find
out whether your aggregator does anything
. . . . more intelligent than just . . .
AGRAWAL: I can definitely find that out
but what I think is possible is inducing a lag
in the other faster feeds
***
AGRAWAL: . . . . We use the same feeds.
So if the development has happened intelligence has been put it must have been put in
the last two years. . . . I can ask them, but
it’s possible they put in something, some
studies were done like that. Let me ask that,
it’s a good thing to know.
(GX 505 (emphasis added); see GX 7-8, 504; Tr. 443).
Agrawal verbally accepted Tower’s offer of employment sometime prior to the October 2009 meeting.
(Tr. 125, 678-79). During the October 2009 meeting,
Agrawal not only repeated that he intended to replicate
SocGen’s strategy at Tower and was staying at SocGen to
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learn how to do so more effectively, but that he had taken
material from SocGen that he intended to keep after he
resigned from SocGen. For example:
[TOWER PARTNER]: Right. You could
modify, you could fill or kill, you can get
the immediate confirmation that you did not
get filled. That’s fine. Let’s stick to what we
are doing right now. OK?
AGRAWAL: What else? So, these are
definitely some things I will find out. But I
guess, I mean from what I am speaking right
now, you are getting a sense that most of the
things are there.
***
AGRAWAL: OK, so we need. Actually for
this I have made lots of notes, which legally
I can share with you once I (UI). I have a lot
of things in actually print. And, um. Whatever I can ask, I am asking and writing it.
So my room right now looks like a —
***
AGRAWAL: — like a zoo. It’s full of paper
and notebooks, printouts, stuff like that.
But, my, . . . my main aim is when you ask
me questions I should know whether or not
I don’t know it or not. If I don’t know it, do
I have any document which I can go back to
(UI) . . . That’s another parallel process that
is running in my head.
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(GX 507 (emphasis added); see GX 506).
e. Agrawal Deletes Incriminating
Documents from His Computer
and Resigns from SocGen
On November 12, 2009, Agrawal deleted the documents containing DQS and ADP code that he had created
and printed out in June, August, and September. Agrawal
also deleted the computer files that he was mistakenly
provided by Idris, principally the computer files related to
ADP. Agrawal did not delete the original DQS files to
which he had properly been given access on June 13,
2009. (GX 102, 201; Tr. 471-83, 772-75).
On November 17, 2009, Agrawal resigned from
SocGen. Under the terms of Agrawal’s employment
agreement with SocGen, Agrawal could not begin working
for a competitor for some months. This was Agrawal’s
“garden leave.” (GX 11; Tr. 144-45). In his written
resignation, Agrawal “assure[d] [SocGen] that [he] would
utilize this time to handle the transition of my responsibilities professionally before I leave.” (GX 11). Shortly
thereafter, SocGen acknowledged Agrawal’s resignation
and reminded him that he was required to honor the terms
of his employment agreement and to observe all of
SocGen’s compliance policies. (GX 3, 12, 20). A few
weeks later, Agrawal stopped going into SocGen’s offices.
(GX 15; Tr. 145, 1069). Agrawal planned to start work at
Tower on April 19, 2010, after his garden leave ended.
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f.
Agrawal Discloses Details of
SocGen’s HFT Systems to Tower
After resigning from SocGen, but before his garden
leave ended, Agrawal prepared for and conducted meetings with Tower personnel, including computer programmers who planned to write the computer code that would
replicate SocGen’s DQS strategy and, ultimately,
SocGen’s ADP strategy. (Tr. 145-47; GX 647). For
example, in early March 2010, Agrawal made himself a
“to do” list that included the entry “[s]tart working on
ADP at night.” (GX 803). During a series of meetings
between mid-March 2010 and mid-April 2010 in both
New Jersey and in New York, Agrawal handed over to
Tower personnel and discussed in detail with them three
increasingly detailed handwritten descriptions of various
aspects of the HFT system that Agrawal wanted to have
built at Tower, including important mathematical and
statistical information, such as DQS’s indicators. (GX
509-11, 907; Tr. 148-69, 199-217, 222-42, 260-63, 33739, 410-11, 244, 618-21, 623, 682-85, 740-43, 745). These
notes were derived directly from SocGen’s DQS system
and the code that comprised it.* (See GX 511, 1302-38;
Tr. 412-13, 487-94).
The Government’s expert at trial, who had reviewed
the notes multiple times, testified that they “describe the
entire strategy. It is the keys to the kingdom” because they
*
Indeed, the notes themselves referred specifically
to DQS, noting in Agrawal’s own handwriting with
respect to a particular series of mathematical formulae that
“[t]his is what is done in DQS right now.” (GX 510).
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“show[] you how to make money.” (Tr. 337, 341).
Thuillier, the author of DQS, described some of Agrawal’s
notes (GX 511) as
[P]seudo code, pseudo code being — so it’s
not written particular programming language. It’s just written in plain English. But
it explains the algorithm. And it’s scanning
down the real time calculation loop of the
DQS satellite into details.
(Tr. 623; see also Tr. 413, 493 (describing GX 511 as a
“simplified rewriting of the code in human language”)).
g. Agrawal’s Arrest, Post-Arrest
Statements, and the Search of
Agrawal’s Apartment
On April 19, 2010, the day Agrawal planned to start
work at Tower, special agents of the Federal Bureau of
Investigation (“FBI”) arrested him at his Jersey City, New
Jersey, apartment. (Tr. 794). After being advised of his
constitutional rights (GX 1101; Tr. 796-97), Agrawal
made a series of incriminating admissions that belied his
claim, made during his trial testimony, that he was specifically authorized to take the code home, including that:
•
He had printed, placed into his backpack, and taken
home printouts of SocGen’s HFT code;
•
He was not specifically authorized to take the code
home, but that he was doing what he needed to do
in order to get his job done;
•
The code was not his “by the letter of the law,” but
“conceptually” was his; and
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•
Agrawal had not told his supervisors that he had
taken the code home because he was afraid to tell
them.
(Tr. 796-811).
Agrawal also permitted the FBI agents to search his
apartment, but only for items that Agrawal decided
belonged to SocGen. (GX 901; Tr. 811-12). During this
consent search, the arresting agents found, in numerous
neatly organized, tabbed, and annotated folders in
Agrawal’s bedroom, thousands of pages of printed code
representing practically the entirety of the code for DQS
and ADP. (GX 902-916, 1003-C). With Agrawal’s handwritten notes (GX 509-11) and the documents found
pursuant to the consent search of Agrawal’s apartment, a
competitor would be able to reconstruct a copy of DQS
and ADP. (Tr. 654-55).
A few days later, FBI special agents conducted a
search of Agrawal’s apartment pursuant to a search
warrant. The agents found additional documents, including
all of the mathematical formulae behind the indicators and
additional handwritten notes that had been derived directly
from the DQS code. (GX 1001, 1004-17; Tr. 495-98, 62430, 825). The notes made clear that Agrawal intended to
provide even more details about the code to Tower once he
joined that company. (See Tr. 669, 907, 1005, 1009, 132838).
2. The Defense Case
The defense case consisted of the testimony of a
SocGen manager, Nicholas Bonin; three character witnesses; and Agrawal himself. Agrawal claimed that his
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direct supervisor, Buchdahl, had requested that Agrawal
begin a project that would involve combining elements of
DQS and ADP and that Buchdahl advised Agrawal to
work from home. (Tr. 938, 941-42). That testimony was
contradicted by Bonin, who supervised the HFT Group at
SocGen during the relevant period, and who made clear
that “it makes no sense to have them [DQS and ADP]
work together whatsoever. They are totally distinct.”
(Tr. 1024-25, 1037). Agrawal admitted printing out and
taking home the code for DQS and ADP, but claimed that
he did so to study at home in order to be better able to do
his job, including the claimed project to combine elements
of DQS and ADP. (Tr. 954-56, 958-62, 1083).
Agrawal admitted that what he shared with Tower
about SocGen’s DQS system was:
Technological aspects of the system as in
how it connects to the market, how it sends
orders, and some basic aspects about the
kind of orders it sends, and how the system
is built architecture-wise at SocGen.
(Tr. 1076-77). Agrawal also admitted that the information
that he gave to Tower in the course of his meetings with
them was “proprietary to SocGen” and that it was wrong
to do so, but stated that he shared this information with
Tower because “[it] made certain things easier,” specifically, it made it easier to get the job to build an HFT
strategy at Tower that was similar to SocGen’s HFT
strategy. (Tr. 1078-79). Agrawal also admitted that
SocGen’s code was valuable because of its secrecy.
(Tr. 1093).
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C. The Charge Conference and the Jury
Instructions
Prior to the close of the Government’s case, the District
Court provided to the parties a draft of the jury instructions
that it proposed to give. (Tr. 805). On several occasions
during the remainder of the trial, the District Court
discussed the content of the proposed jury instructions
with the parties.
Specifically, on the day the District Court provided its
draft jury instructions to the parties, the District Court
heard the parties’ initial objections to the proposed
instructions. The District Court had proposed to instruct
the jury that, as to Count One, the Government was
required to prove that “as a factual matter, the computer
code was related to a product that was, at least in part,
produced for, or placed in, interstate or foreign commerce.” (Add. 13). The Government proposed, because of
the text of Section 1832 (“Whoever, with intent to convert
a trade secret, that is related to or included in a product
that is produced for or placed in interstate or foreign
commerce”) to add the phrase “or included in.” (Tr. 88556). Agrawal did not object. The District Court added into
the proposed charge the language “or included in,” noting
that “[t]his is, I have a feeling, not a matter that is going to
be materially disputed in any event.” (Tr. 885-86). Neither
at this time, nor at any time thereafter, did Agrawal
suggest that this instruction was flawed. Nor did Agrawal
ever contend during the trial or in a pretrial motion that the
code was not, in fact, “related to or included in a product
that is produced for or placed in interstate or foreign
commerce.” 18 U.S.C. § 1832(a).
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The District Court had also proposed, for one element
of the instruction on Count One, the theft of trade secrets
count, to instruct the jury that to convict the defendant, the
Government had to prove beyond a reasonable doubt:
Second, that at some time between June
2009 and April 2010 the defendant stole
[SocGen]’s trade secret, that is, without
authorization from [SocGen] he intentionally misappropriated the computer code to
his own use and/or the use of Tower, knowing this would injure [SocGen.]
(Add. 13). The District Court further proposed to instruct
the jury that “misappropriating a trade secret includes
copying, duplicating, or otherwise replicating the trade
secret.” (Add. 13). At the charge conference, the Government suggested that the District Court add “conveying” to
the definition of “misappropriating,” given that “convey”
was a term present in Section 1832(a)(2) and one of the
things that Agrawal did during the course of his meetings
with Tower. (Tr. 884-85).
Agrawal then articulated a general objection to the use,
in the definition of “misappropriating,” of any term
beyond those charged in a “to wit” clause contained in
paragraph 19 of the Indictment. (A. 15). Agrawal contended that, by virtue of this clause of paragraph 19, the
Government was limited to proving only that Agrawal
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“copied, printed, and removed” the code from SocGen’s
offices. (Tr. 888-96).*
The next day, during a sidebar in the midst of
Agrawal’s testimony, it became clear that Agrawal’s
defense to Count One and Two of the Indictment was that,
when he initially took the code from SocGen’s offices, he
intended to use it for SocGen’s benefit and that, therefore,
his conduct did not conform to the allegation of this “to
wit” clause and he could not be guilty, even if he developed the intent to use the code for Tower’s benefit later
on. (Tr. 919-20).
The parties continued this colloquy prior to Agrawal’s
completing his testimony. (Tr. 1003-14). The District
Court noted that the “to wit” clause contained in paragraph
19 of the Indictment could not be divorced from the
preceding 18 paragraphs of the Indictment, which charged
conduct that lasted from June 12, 2009 (when Agrawal
first got access to the code for DQS and ADP) and April
2010 (when Agrawal was arrested) and which also charged
that Agrawal had conveyed details of the code, including
in the form of handwritten notes, to Tower. (Tr. 1004-05;
A. 14-15). At that point, the District Court indicated that,
on the subject of the mental state required for the trade
secret count, it intended to instruct the jury that:
Third, when he removed the code or at any
point thereafter when he was still in unauthorized possession of the computer code,
*
Agrawal had made no motion in limine advancing
this argument.
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the defendant formed the intent to convert
the code to an economic benefit of himself
or others knowing or intending this would
injure [SocGen].
(Tr. 1006). The District Court then asserted: “This is a
correct statement of this law and this indictment and then
the defense you are raising is not a defense,” and permitted
the defense to respond to the assertion. (Tr. 1006).
Agrawal’s counsel indicated that he did not agree and,
when asked why, stated that he “really [did not] want to
tell” the District Court because “candor with the Court”
“require[d] sharing with the [G]overnment.” (Tr. 1006).
The District Court noted that “it would be an absurdity to
have as a defense of: Well, at the moment I took it home
I didn’t have any bad intent but two days later I formed it”
and further indicated that it intended to provide a further
instruction regarding the meaning of “without authorization” (see Add. 13-14) by charging the jury that, “[a]s to
the second element, without authorization means that
[SocGen] did not approve the removal of the computer
code by the defendant for his intended purpose. For
example, an employer might approve an employee taking
a trade secret home to work on it for the employer’s
benefit but if the employee then starts using the trade
secret for his own benefit, at that — or I should say or the
benefit of another — at that point the removal becomes
unauthorized. And I think that is the only sensible way to
read the statute.” (Tr. 1010). Agrawal then informed the
District Court that this proposed instruction on authorization “eviscerate[d] what [he] intended to argue,” but was,
nonetheless, “a correct statement of the law.” (Tr. 1013).
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The next morning, Agrawal completed his testimony.
Thereafter, Agrawal for the first time argued that, if the
District Court instructed the jury in the manner that it had
indicated, there was both an impermissible variance and a
constructive amendment of the Indictment. (Tr. 1166-74).
Agrawal cited United States v. D’Amelio, 636 F. Supp. 2d
234 (S.D.N.Y. 2009), as his authority for the proposition
that jury instructions permitting conviction for conduct
other than that described in paragraph 19’s “to wit” clause
would be improper. In D’Amelio, the district court granted
a Rule 33 motion following a jury verdict because of a
finding that the jury instruction resulted in an impermissible constructive amendment, where the one-paragraph
indictment at issue charged that the defendant “used a
computer and the Internet” to entice a minor, but the
district court’s jury instruction permitted a conviction on
the basis of a telephone call. Id. at 237, 239-46. The
District Court noted that the situation in D’Amelio was
“wholly distinguishable because, among other things, that
was the only facts — that was the only thing to put the
defendant on notice as to what was being charged. Here,
the grand jury made clear [and] the defendant fully
understood — and I think under any reasonable reading of
this indictment — that the entirety of this conduct was
being charged right through April and that the theory was
that there came a point where he converted these materials.” (Tr. 1172-73).* In other words, the District Court
made clear that its proposed instruction did not create a
*
The Government’s appeal of the decision in United
States v. D’Amelio is presently pending before this Court
under Docket Number 09-2541-cr.
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constructive amendment or variance. Thereafter, Agrawal
called three character witness and the defense rested.
(Tr. 1175-1206).
The parties again discussed the District Court’s
proposed instruction on authorization. (Tr. 1207). Agrawal
submitted that no example should be used because it was
unnecessary, but did not contend that the instruction was
an incorrect statement of law. (Tr. 1208). Ultimately, the
District Court overruled Agrawal’s objection that the
instruction, as formulated, directed a conviction because,
as the District Court said, “I think that what the heart of
your problem there is that your client as I indicated earlier
in the Court’s view has already admitted under oath all of
the elements of the charges.” (Tr. 1211).
At the close of all of the evidence, Agrawal moved to
dismiss Counts One and Two of the Indictment, pursuant
to Rule 29 of the Federal Rules of Criminal Procedure.
The sole ground articulated was that “the charges as
explicated by the Court’s charge and by the evidence
presented by the government in this case constitute a
prejudicial variance and a constructive amendment of the
charges of the grand jury indictment.” (Tr. 1214). The
District Court denied the motion.
The next day, the District Court instructed the jury on
the law, the jury deliberated, and the jury returned a guilty
verdict on both counts of the Indictment. (Tr. 1232-23,
1302-19).
Agrawal did not file any post-trial motions.
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D. The Sentencing Proceeding
Agrawal does not challenge his sentence on appeal.
One aspect of his sentencing is pertinent to this appeal,
however — the District Court’s findings, in the context of
granting acceptance points to Agrawal, that Agrawal had
deliberately and strategically pursued a risky strategy at
trial to seek to limit the permissible theory of guilt to the
“to wit” clause of paragraph 19, and to present a defense
that contradicted that clause, but otherwise admitted guilt
under the statute. As Judge Rakoff explained:
The defense had a view of the indictment
that they believe allowed them to argue that
if at the moment he took the codes home, he
had not yet formed an intent to give them to
Tower, things to that effect, that not under
the law generally but under the terms of the
indictment, that he would be entitled to a
judgment of acquittal if the jury at least
credited his testimony.
It was a view of the indictment that this
court did not agree with. Counsel made a
calculated decision, and these are always
tough strategic calls, not to raise this pretrial. No pretrial request was made for a
determination of this issue of law either
before Judge Koeltl who originally had the
case . . . before me. Defense counsel even
went so far as to commit in his opening
statement that his client would take the
stand, not knowing yet whether the court
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would agree or disagree with his interpretation of the indictment.
The matter came to a head after the court
issued the second version of its proposed
charge but of course defense counsel could
have brought it to a head at any previous
time and chose not to. But I would note for
the record that, first, at the time that the
second version of the charge was delivered
to defense counsel while the defendant had
already begun his testimony, he had not
reached any point of the testimony that bore
on the issue that the charge was concerned
with.
***
But the result of all this was that under the
charge as the court gave it and the testimony
that Mr. Agrawal gave, it seemed to the
court that he was essentially admitting all
elements of the charge as the court interpreted the indictment.
(2/28/11 Tr. at 29-30). Later on, the District Court described Agrawal’s trial strategy as follows:
Mr. Fisher made the determination with his
client’s full concurrence to hold back on
raising this interpretation of the indictment.
In hindsight that was a mistake, but I don’t
mean to . . . fault it; it was a calculated
strategic call.
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(Id. at 32 (emphasis added)).
The District Court found that Agrawal’s applicable
Guidelines range was 63 to 78 months’ imprisonment; and
imposed a non-Guidelines sentence of 36 months’ imprisonment on each of Counts One and Two of the Indictment.
(Id. at 64; A. 325-26).
Agrawal filed a timely notice of appeal on March 10,
2011. (A. 330).
ARG UM EN T
In the District Court, Agrawal pursued a single,
deliberate strategy that depended on surprise — he gambled that the District Court would adopt his view that a
narrow reading of Indictment paragraph 19’s “to wit”
clause trumped the broader allegations of the Indictment
and limited the otherwise applicable elements of the
charged offense and the permissible grounds for conviction. This strategy depended on surprise, because if
Agrawal disclosed it prior to trial (such as by seeking a
pretrial ruling from the District Court), the Government
might have simply expanded the language of this “to wit”
clause in a superseding indictment.
In the course of pursuing this strategy, Agrawal
conceded that the Court’s instructions were correct as a
matter of law (although inconsistent with his to-wit-clause
strategy), and Agrawal did not argue that the EEA does not
extend to his theft of code from SocGen’s proprietary HFT
system, or that such stolen property could not support a
conviction under the NSPA. This hidden strategy had
potential benefits, and as Judge Rakoff explained, risks —
that the District Court might read the Indictment as fairly
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charging theories beyond those contained in paragraph
19’s “to wit” clause, and thus might instruct the jury that
it could convict consistent with those theories and the
elements of the charged crimes.
On appeal, in addition to arguing the same to-witclause strategy he pursued below (and rejected by Judge
Rakoff based on a fair reading of the Indictment), Agrawal
has now reversed course, claiming that the legal instructions were erroneous and that neither the EEA nor the
NSPA criminalize his conduct. None of these arguments
has merit, and the conviction should be affirmed.
POINT I
The District Court Properly
Instructed the Jury
Despite the absence of any objections below as to the
instructions he now challenges, Agrawal contends on
appeal, with respect to the theft of trade secrets offense
charged in Count One, that the District Court (1) improperly instructed the jury as to the defendant’s required intent
and (2) failed to instruct the jury as to the defendant’s
required knowledge. (Br. 19-28). Agrawal further claims,
with respect to the interstate transportation of stolen
property offense charged in Count Two, that the District
Court (1) failed to instruct the jury that the Government
had to establish that the computer code was “goods, wares
or, merchandise” within the meaning of the statute; (2)
failed to instruct the jury on how to determine the value of
the code; and (3) improperly instructed the jury as to the
Government’s burden of showing that the code was
“related to or included in a product that is produced for or
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placed in interstate or foreign commerce.” (Br. 28-36). As
explained below, Agrawal’s claims are without merit
because he has not satisfied his responsibility of establishing plain error.
A. Applicable Law
A defendant challenging a jury instruction on appeal
faces a heavy burden: he must establish both that he
requested a charge that “accurately represented the law in
every respect” and that the charge delivered was erroneous
and caused him prejudice. United States v. Pujana-Mena,
949 F.2d 24, 27 (2d Cir. 1991). In reviewing jury instructions, this Court must “‘review the instructions as a whole
to see if the entire charge delivered a correct interpretation
of the law.’” United States v. Carr, 880 F.2d 1550, 1555
(2d Cir. 1989) (quoting California v. Brown, 479 U.S.
538, 541 (1987)); see also United States v. Mulder, 273
F.3d 91, 105 (2d Cir. 2001) (court must “look to ‘the
charge as a whole’ to determine whether it ‘adequately
reflected the law’ and ‘would have conveyed to a reasonable juror’ the relevant law” (quoting United States v.
Jones, 30 F.3d 276, 284 (2d Cir. 1994))).
As a general matter, no particular wording is required
for an instruction to be legally sufficient, so long as “taken
as a whole” the instructions correctly convey the required
legal principles. See Victor v. Nebraska, 511 U.S. 1, 5
(1994) (quoting Holland v. United States, 348 U.S. 121,
140 (1954)). Further, the trial court “has discretion to
determine what language to use in instructing the jury as
long as it adequately states the law.” United States v.
Alkins, 925 F.2d 541, 550 (2d Cir. 1991). This Court
reviews a preserved claim of error in jury instructions de
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novo, reversing a conviction “only where appellant can
show that, viewing the charge as a whole, there was a
prejudicial error.” United States v. Tropeano, 252 F.3d
653, 657-58 (2d Cir. 2001).
However, Rule 30 of the Federal Rules of Criminal
Procedure provides, in relevant part, that “[a] party who
objects to any portion of the instructions or to a failure to
give a requested instruction must inform the court of the
specific objection and the grounds for the objection before
the jury retires to deliberate.” Fed. R. Crim. P. 30(d). In
order to satisfy the requirement, the defendant must “direct
the trial court’s attention to the contention that is to be
raised on appeal.” United States v. Masotto, 73 F.3d 1233,
1237 (2d Cir. 1996). “The purpose of this provision is to
provide the trial court with an opportunity to correct any
error in the jury instructions before the jury begins deliberating.” Id. And of course the contemporaneous-objection
rule prevents a litigant from “‘sandbagging’ the court —
remaining silent about his objection and belatedly raising
the error only if the case does not conclude in his favor.”
Puckett v. United States, 556 U.S. 129, 134 (2009).
Where a defendant fails to make a specific and timely
objection to a district court’s legal instructions, those
instructions are subject to review only for plain error.
United States v. Middlemiss, 217 F.3d 112, 121 (2d Cir.
2000); see also United States v. Shaoul, 41 F.3d 811, 817
(2d Cir. 1994) (“The error must be so plain that the trial
judge and prosecutor were derelict in countenancing it,
even absent the defendant’s timely assistance in detecting
it.” (internal quotation marks and brackets omitted)). The
Supreme Court has confirmed that plain error is a strin-
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gent standard, requiring an appellant to demonstrate that
“(1) there is an error; (2) the error is clear or obvious,
rather than subject to reasonable dispute; (3) the error
affected the appellant’s substantial rights, which in the
ordinary case means it affected the outcome of the district
court proceedings; and (4) the error seriously affected the
fairness, integrity or public reputation of judicial proceedings.” United States v. Marcus, 130 S. Ct. 2159, 2164
(2010) (internal quotation marks and citations omitted).
For an instructional error to have affected a defendant’s substantial rights, there must have been “a reasonable probability that the error affected the outcome of the
trial.”Marcus, 130 S. Ct. at 2164; cf. Neder v. United
States, 527 U.S. 1, 15 (1999) (holding that where the
district judge instructed the jury that it should not consider
an element, and also failed to instruct on an element, error
was subject to harmless-error analysis); United States v.
Brunshtein, 344 F.3d 91, 99-101 (2d Cir. 2003) (holding
that where district court failed to submit element to jury,
and instead decided the issue in the Government’s favor
as a matter of law, error was harmless).
Notably, it is the “rare case in which an improper [jury]
instruction will justify reversal of a criminal conviction
when no objection has been made in the trial court.”
Henderson v. Kibbe, 431 U.S. 145, 154 (1977).
B. Discussion
1. Agrawal’s Claims Are Subject to Plain
Error Review
The only objections Agrawal raised to the jury instructions about which he now complains did not address their
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legal sufficiency. Instead, Agrawal complained about the
charge only to the extent it conflicted with his to-witclause defense. Thus, Agrawal’s counsel objected to the
District Court’s instruction that the jury could find that
Agrawal formed the necessary intent to commit the
charged offense at the time he took the code or at any time
thereafter (Tr. 1009; Add. 32), as well as the District
Court’s explanation that removing the code “without
authorization” encompassed, for example, the instance in
which the defendant may have taken the code with
SocGen’s approval but then later converted the code by
using it for his own benefit. (Tr. 1101; Add. 33).
Significantly, Agrawal did not object to these elements
of the jury instructions as incorrect statements of the law,
but instead only insofar as they exceeded his “to wit”
clause-based defense. In fact, Agrawal’s counsel informed
the District Court that the instruction on intent was “a
correct statement of the law,” and only objected to the
Court’s explanation of the phrase “without authorization”
as “without any basis in the indictment.” (Tr. 1013; see
also Tr. 1103).
At no time did Agrawal (1) attempt to articulate his
complaints in the District Court; (2) direct the District
Court to any of the arguments on which he now relies; or
(3) offer any alternative language that he now claims
should have been given. Thus, Agrawal has satisfied none
of the prerequisites under Rules 30 and 52(b) for preserving his challenge on appeal. Accordingly, Agrawal has
forfeited his objections on appeal and the jury charge may
be reviewed only for plain error.
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2. Agrawal Does Not Satisfy the Plain
Error Standard on Appeal
a. Count One — Instruction as to
Intent
Agrawal asserts that District Court’s “intent” instruction as to the theft of trade secrets offense charged in
Count One was erroneous because it instructed the jury
that a conviction was proper if the jury found that Agrawal
had formed “the intent to convert” SocGen’s computer
code at the time he copied or removed it from SocGen’s
offices “or at any point thereafter.” The specific instructions at issue were:
In Count One, Mr. Agrawal is charged with
theft of trade secrets.
In order to sustain its burden of proof with
respect to this charge, the government must
prove beyond a reasonable doubt each of the
following four element[s]:
***
Third, that when he removed the code, or at
any point thereafter when he was still in
unauthorized possession of the computer
code, the defendant formed the intent to
convert the code to the economic benefit of
himself or others, knowing or intending that
this would injure Société Générale;
(Tr. 1313-14).
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For the first time on appeal, Agrawal now claims the
instruction is wrong because, under the statute, he is
required to have the “intent to convert” the code to his
own benefit or the benefit of another at the time he
initially copied or removed it and not at some later time as
the District Court charged the jury. (Br. 25). Agrawal
offers no case law to support this proposition. Indeed,
while the two opinions he does cite, United States v.
Genovese, 409 F. Supp. 2d 253, 256 (S.D.N.Y. 2005) and
United States v. Hsu, 155 F.3d 189, 196 (3rd Cir. 1998),
observe generally that the EEA criminalizes the taking of
a trade secret with the intent to convert the trade secret to
the taker’s or some other person’s use, they do not discuss
when the intent to convert must have been formed relative
to the time the trade secret was first taken.*
A sensible and plain reading of the relevant statutory
language is that the “intent to convert” can, as the District
Court instructed the jury, develop at the time a defendant
*
Although admitting they do not have any
“authoritative value,” Agrawal also cites the jury
instructions in United States v. Aleynikov, 10 Cr. 96
(DLC), to support his interpretation of the intent element.
(Br. 24). The Aleynikov charge, however, does not support
the weight Agrawal seeks to place on it. Unlike in
Agrawal, where the defendant through his direct testimony
raised the factual issue that his removal of the code was
authorized and he only later formed an intent to misuse his
authorized access, in Aleynikov, the defendant copied the
code on his last day of work and claimed he did so not
with authorization, but that he always had benign intent.
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first gains possession of a trade secret or sometime
thereafter. Indeed, to restrict the EEA to only those cases
in which the defendant’s bad intent precedes his taking
possession of a trade secret, as Agrawal now proposes,
leads to the absurd result that instances of embezzlement
would not be criminalized. That is, an individual who had
authorized possession of a trade secret but then later
decided to misuse or steal it for his own benefit or the
benefit of another could not be prosecuted under the EEA
— a result that defies common sense as well as Congress’s
intent to deter the theft of that category of information.*
In any event, even assuming Agrawal’s statutory
interpretation is correct, he has not satisfied his burden of
showing that Judge Rakoff committed plain error because
(1) the District Court’s view of the intent element, given
the specific facts of the case and a reasonable reading of
the statute, was not a clear or obvious mistake and (2) the
District Court’s charge did not affect the outcome of the
trial given that the Government’s evidence — including
Agrawal’s job search, his promises to Tower that he would
build a clone of SocGen’s system, and the fact that he
printed out nearly the entire code around the time he
accepted Tower’s offer — showed that Agrawal had
*
Indeed, defense counsel didn’t object when the
District Court and the Government discussed how
“conversion” encompassed not just stealing but instances
in which a defendant had lawful access to the code but
later misappropriates it, i.e., embezzlement. (Tr. 894-95).
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intended to steal the code from the moment he first printed
it out and took it from his employer’s Manhattan offices.*
*
Agrawal attempts to minimize the devastating
evidence of Agrawal’s intent to steal the code at the time
he removed it from SocGen’s offices by citing examples
two co-workers who printed out and took home code
themselves. (Br. 37-38). Agrawal’s argument, however,
only serves to illustrate his own criminal intent. While one
of the co-workers, Idris, testified that he had printed out
code (without specifying what kind of code it was), he did
not testify, contrary to Agrawal’s claim on appeal, that he
had printed it out so that he could study it outside of the
office. (Tr. 424-25). Idris further testified that when he
studied the DQS code with Agrawal at SocGen, he did not
print it out because he didn’t think it was “useful” to do so
because the code was easier to view using software
development tools on a computer. (Tr. 392-93). The other
co-worker, Thuillier, testified that he had only printed out
“four or five pages” of DQS or ADP code on
approximately three occasions in three years, and that he
either returned to the code to SocGen or threw it out, and
never stored it at home. (Tr. 609-11). In contrast, Agrawal
printed out more than a thousand pages of code — nearly
every piece of code he had access to, including
programming for ADP, a system for which he had no
responsibility but which the evidence showed he planned
to replicate at Tower. Moreover, Agrawal made no attempt
to return the code he had taken home even after he had
resigned from SocGen.
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b. Count One — Instruction as to
Knowledge
Agrawal argues that the District Court’s “knowledge”
instruction as to Count One is wrong as a matter of law
because “at no time was the jury instructed that Agrawal
had to know he was without authorization” when he took
the computer code from SocGen’s offices. (Br. 26)
(emphasis in original). Furthermore, in a variation of his
earlier argument that the defendant must form his “intent
to convert” at the moment he took the code, Agrawal also
complains that the District Court erred when it instructed
the jury that even though an employee may have initially
taken a trade secret with his employer’s authorization,
such a removal becomes unauthorized once the employee
begins using the trade secret for his own or another’s
benefit. (Br. 27-28). The specific instructions to which
Agrawal objects are as follows:
Second, that at some point [in] time
between June 2009 and April 2010 the
defendant copied and/or removed the computer code from the offices of Société
Générale without authorization from Société
Générale;
***
As to the second element, “without authorization” means that Société Générale
did not approve the removal of the computer
code by the defendant for his intended
purpose. For example, an employer might
approve an employee taking a trade secret
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home to work on it for the employer’s benefit, but if the employee then starts using the
trade secret for his own benefit or the benefit of another, at that point the removal
becomes unauthorized.
(Tr. 1313-14).
Had the defendant objected below, the District Court
would doubtless have made more explicit what was
implied by the instructions as a whole — that the Government had to prove that the defendant knew that his use of
the trade secret was unauthorized. He did not object, likely
because it was clear to all parties and the jury that this
knowledge was required. (Tr. 1218-19 (Government
summation: “He stole the code for both DQS and ADP.
He knew that the code was not his. . . . He stole the code.
He knew it wasn’t his and he took it without authorization.”); Tr. 1249 (Government summation: “he was afraid
to tell his boss that he had the code at home. Because he
never was supposed to have the code at home”).
In any event, the evidence at trial amply showed that
Agrawal knew that he had taken the code without authorization. For example, Agrawal came into SocGen’s offices
to print out the code on a weekend when no one else was
around, he never told anyone at SocGen that he had the
code, and he never tried to return it after he resigned.
Agrawal also admitted during his testimony that (1) he had
shared information with Tower that was “proprietary to
SocGen” and that it was wrong to do so; (2) he was not
specifically authorized to take the code home; and (3) the
code was not his “by the letter of the law.” (Tr. 796-811,
1078-79). Accordingly, Agrawal has not satisfied the
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necessary showing of plain error with respect to the
District Court’s “knowledge” charge as to Count One.
c.
Count Two — Instruction as to
“Goods, Wares, or Merchandise”
Agrawal contends that Judge Rakoff failed to instruct
the jury with respect to Count Two that to convict it must
find that the computer code was “goods, wares or merchandise” within the meaning of the NSPA, that is, whether the
code was a product ordinarily the subject of commerce.
Agrawal cannot show that the District Court’s jury
charge constituted plain error because it would not have
affected the outcome of his trial. As an initial matter, the
question of whether SocGen’s code constituted “goods,
wares or merchandise” was never contested by the defendant at any point during the trial, much less during the
charge conference. Moreover, the evidence at trial —
including the fact that Tower was willing to pay Agrawal
significantly more than he earned at SocGen and
Thuillier’s testimony that he knew of at least one instance
in which high frequency trading code had been bought and
sold — demonstrated that the jury would have concluded
that a market existed for the SocGen code. (Tr. 651).
d. Count Two — Instruction as to
Interstate or Foreign Commerce
On appeal, Agrawal admits that the District Court
properly instructed the jury as to the interstate or foreign
commerce requirement of the NSPA violation charged in
Count Two. (Br. 32). At the same time, however, he
claims that Judge Rakoff’s charge with respect to Count
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One improperly confused the jury as to this element of the
offense charged in Count Two. (Br. 32-33).
Agrawal cannot show error, much less plain error with
this instruction. As he admits, it is correct as a matter of
law. Moreover, Judge Rakoff instructed the jury that it
must consider each of the charges separately. (Tr. 1313).
Absent evidence to the contrary, and here there is none,
juries are presumed to follow the District Court’s instructions. See, e.g., United States v. Whitten, 610 F.3d 168,
191 (2d Cir. 2010). Indeed, Agrawal fails to articulate on
appeal exactly how the jury would have been confused,
even if it consulted Count One’s instructions in considering Count Two. Finally, the fact that Agrawal transported
SocGen’s code in interstate commerce after he stole it was
simply not a contested issue at trial, and accordingly, even
a confusing instruction would have had no impact on the
trial’s outcome. Accordingly, Agrawal fails to carry his
burden of showing plain error.
In addition, Agrawal appears to argue that a crossreference between Count Two and Count One regarding
the meaning of “convert” might have permitted the jury to
convict even if it found that the code crossed state lines
and then later became stolen. (Br. 34). This is simply not
a fair reading of the instruction, or of the District Court’s
instructions as a whole. Agrawal’s argument depends on
a phrase in the District Court’s instruction on the second
element of Count Two, but the very next instruction stated:
“Third, that the defendant, knowing that the computer
code was stolen, purposely transported it in interstate
commerce.” (Tr. 1315). In other words, the instructions
were clear that the theft must precede the transportation,
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and there was no error, let alone an error that was plain or
that could be said to have affected the outcome.
e. Count Two — Instruction as to
Determining the Value of the
Code
Finally, Agrawal contends that Judge Rakoff erred by
failing to provide the jury any guidance on determining
whether the code had a value of $5,000 or more. (Br. 3436). This argument fails for a number of reasons. First, as
Agrawal admits on appeal, the NSPA “does not specify
any particular means of valuation,” nor does Agrawal offer
any case law to support the proposition that the jury must
follow a particular standard. (Br. 34). Accordingly, there
was no error that was plain. Second, the valuation of the
code was not an issue at trial — defense counsel not only
did not object to this aspect of the jury charge but refused
the District Court’s specific invitation to comment on it:
THE COURT: All right. Anything on instruction eleven [addressing the elements of
interstate transportation of stolen property]?
[PROSECUTOR]: The government’s one
thought was for the fourth element. It says
the value of the trade secret was $5,000 or
more. If the government failed completely
on the notion that what the defendant took
was a trade secret, we could still easily
convict the defendant for having stolen
mere property. And so —
THE COURT: Okay. The value of property
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[PROSECUTOR]: Correct. Exactly.
THE COURT: Okay. Anything from the
defense on this?
[DEFENSE COUNSEL]: No your Honor,
not from me.
(Tr. 896). Finally, the evidence at trial conclusively
showed that the stolen property met the $5,000 threshold.
SocGen had spent millions of dollars to develop the code
and had earned tens of millions of dollars in profits per
year from it. And, Agrawal negotiated six-figure salaries
and bonuses for his work on the code and his plan to
replicate the code for Tower. Accordingly, there is no
likelihood that further instructions on value would have
affected the outcome, and there was no plain error.
POINT II
There Was No Constructive Amendment of
the Indictment
The Indictment fairly charged Agrawal with alternate
theories — that he had the intent to steal the code when he
first printed it out, and also that he formed the intent at
some other point between June 12, 2009 and April 2010.
The Indictment also charged that Agrawal misappropriated
SocGen’s trade secret not only by copying the code, but
also by conveying notes to Tower. Thus, this Court should
reject Agrawal’s prejudicial variance and constructive
amendment arguments.
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A. Applicable Law
To prevail on a constructive amendment claim, “a
defendant must demonstrate that either the proof at trial or
the trial court’s jury instructions so altered an essential
element of the charge that, upon review, it is uncertain
whether the defendant was convicted of conduct that was
the subject of the grand jury’s indictment.” United States
v. Ionia Mgmt., 555 F.3d 303, 310 (2d Cir. 2009); accord
United States v. Rigas, 490 F.3d 208, 227-28 (2d Cir.
2007); United States v. Frank, 156 F.3d 332, 337 (2d Cir.
1997). The prohibition against constructive amendments
rests upon two concerns: that the defendant be tried only
for crimes charged by the grand jury, and that the defendant have adequate notice of the nature of those charges.
See United States v. Wallace, 59 F.3d 333, 337 (2d Cir.
1995). “The issue in determining whether an indictment
has been constructively amended, then, is whether the
deviation between the facts alleged in the indictment and
the proof adduced at trial undercuts these constitutional
requirements.” Rigas, 490 F.3d at 228.
“[N]ot all modifications constitute constructive amendments.” United States v. Salmonese, 352 F.3d 608, 621 (2d
Cir. 2003). Rather, this Court has “‘consistently permitted
significant flexibility in proof, provided that the defendant
was given notice of the “core of criminality” to be proven
at trial.’” United States v. Rigas, 490 F.3d at 208 (quoting
United States v. Patino, 962 F.2d 263, 266 (2d Cir. 1992)).
In assessing whether a constructive amendment has
occurred, “[t]he critical determination is whether the
allegations and the proof ‘substantially correspond.’”
United States v. Danielson, 199 F.3d 666, 670 (2d Cir.
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1999) (quoting United States v. Patino, 962 F.2d at 266).
“As long as the crime and the elements of the offense that
sustain the conviction are fully and clearly set out in the
indictment, the right to a grand jury is not normally
violated by the fact that the indictment alleges more crimes
or other means of committing the same crime.” United
States v. Miller, 471 U.S. 130, 136 (1985). Thus the
introduction of specific evidence not mentioned in an
indictment does not of itself constitute a constructive
amendment, unless the evidence is offered to prove a
separate and unrelated scheme not alleged in the indictment. Id. (“Convictions generally have been sustained as
long as the proof on which they are based corresponds to
an offense that was clearly set out in the indictment.”);
Rigas, 490 F.3d at 228 (“‘[P]roof at trial need not, indeed
cannot, be a precise replica of the charges contained in an
indictment.’” (quoting United States v. Heimann, 705 F.2d
662, 666 (2d Cir. 1983))). There is no constructive amendment “where a generally-framed indictment encompasses
the specific legal theory or evidence used at trial.” United
States v. Salmonese, 352 F.3d at 620 (quoting United
States v. Wallace, 59 F.3d at 337); United States v.
Morgenstern, 933 F.2d 1108, 1115 (2d Cir. 1991).
This Court reviews preserved constructive amendment
claims de novo. See, e.g., United States v. McCourty, 562
F.3d 458, 469 (2d Cir. 2009); Rigas, 490 F.3d at 225-26.
In contrast to a constructive amendment, a prejudicial
variance occurs when “the charging terms of the indictment are left unaltered, but the evidence at trial proves
facts materially different from those alleged in the indictment.” United States v. Zingaro, 858 F.2d 94, 98 (2d Cir.
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1988); see United States v. Dupre, 462 F.3d 131, 140 (2d
Cir. 2006). “A variance, unlike a constructive amendment,
does not broaden the possible basis for conviction beyond
that contained in the indictment,” Patino, 962 F.2d at 266,
and accordingly a defendant must show that the variance
“result[ed] in substantial prejudice” to obtain relief from
his conviction. United States v. McDermott, 918 F.2d 319,
326 (2d Cir. 1990) (internal quotation marks omitted). A
variance is not prejudicial “where the allegation and proof
substantially correspond, where the variance is not of a
character that could have misled the defendant at the trial,
and where the variance is not such as to deprive the
accused of his right to be protected against another
prosecution for the same offense.” United States v.
Mucciante, 21 F.3d 1228, 1236 (2d Cir. 1994) (internal
quotation marks omitted).
B. Discussion
What Agrawal now claims were “the Government’s
added theories of liability” on the theft of trade secrets
count (Br. 41) were nothing of the sort. As a result, the
Court should reject Agrawal’s claim of a constructive
amendment.
First, Count One of the Indictment was not limited to
merely the “to wit” clause of paragraph 19 of the Indictment. (A. 15-16). As the District Court made clear,
paragraph 19 “is informed by the other 18 paragraphs. The
grand jury didn’t just charge the statutory [language]. This
could have been a one-count indictment theoretically
limited to [paragraph] 19, but it wasn’t. So I think in
describing the nature of the charge, the Court must look to
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the entirety of the indictment and not just to this half of a
sentence.” (Tr. 1004-05).
In that regard, on the subject of when the crime
charged in Count One occurred — before Agrawal’s
resignation when he removed the code from SocGen’s
offices or after his resignation when he kept it — the
Indictment charges, in essence, both, i.e., that it occurred
“[f]rom at least on or about June 12, 2009, up through an
including in or about April 2010.” (A. 15). It did not
charge that the theft of trade secrets occurred only when
Agrawal actually printed out the code and removed it from
SocGen’s offices in June, July, August and September
2009 (prior to his November 17, 2009, resignation). The
Indictment noted, among other things, that Agrawal had
been negotiating for employment with Tower (referred to
in the Indictment as the “Investment Firm”) “starting in
about mid-2009,” i.e., prior his November 17, 2009,
resignation from SocGen, and that, prior to his scheduled
starting date at Tower in April 2010, Agrawal had disclosed features of SocGen’s HFT code to Tower. (A. 14).
Finally, in a section of the Indictment called
“AGRAWAL’s Theft of [SocGen’s] [HFT] Computer
Code” (A. 12 (emphasis added)), the Indictment pointed to
various conduct constituting Agrawal’s actual theft of the
code. Specifically, the Indictment alleges that: (1) Agrawal
accessed the code for DQS (referred to in the Indictment
as “Unit A”); (2) Agrawal accessed the code for ADP
(referred to in the Indictment as “Unit B”), which he had
mistakenly been given; (3) Agrawal created and printed
various documents containing DQS code on June 13,
2009; (4) Agrawal created and printed of various docu-
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ments containing ADP code on August 31, 2009, September 2, 2009, and September 11, 2009; and (5) Agrawal
deleted electronic files from his network folder on November 12, 2009 (A. 13-14). All of this conduct — in a section
about Agrawal’s “theft” — occurred on various dates
including, but not limited to, the date that Agrawal first
printed code and removed it from SocGen’s offices. No
fair reading of the entirety of the Indictment could understand it to preclude a theory that Agrawal’s bad intent
arose after he first printed DQS code.
Agrawal’s second constructive amendment argument
is that, the Indictment alleged only the theft of code, and
a conviction for conveying the trade secret in the form of
handwritten notes was thus prohibited. (Br. 49-50). This
argument is raised for the first time on appeal, and in any
event ignores the clear allegations of the Indictment. The
Indictment specifically described Agrawal’s use of
handwritten notes to convey SocGen’s trade secret to
Tower:
Prior to accepting the offer, [AGRAWAL]
had met with employees of [Tower] to
discuss the details of a trading system
AGRAWAL intended to develop at the
Investment Firm. AGRAWAL had provided
handwritten notes to employees of [Tower]
that related to the trading system
AGRAWAL was proposing to develop.
Those handwritten notes described, among
other things, features of [SocGen’s] Code
and features of the system architecture of
the Trading System.
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(A. 14-15 (emphasis added)).
In addition, Agrawal’s argument ignores other allegations of the Indictment. For example, the Indictment
described the measures that SocGen took to prevent the
“unauthorized . . . transfer” of the code, including the
imposition of limits on who could access the code and
what parts of it they could access. (A. 11 (emphasis
added)). And, paragraph 19 of the Indictment included
everything unlawful under Section 1832(a)(2), and
charged that Agrawal “unlawfully, willfully, and knowingly, without authorization” “copied, duplicated,
sketched, drew, photographed, downloaded, uploaded,
altered, destroyed, photocopied, replicated, transmitted,
delivered, sent, mailed, communicated, and conveyed” a
trade secret. (A. 15). Indeed, Agrawal was not charged
under Section 1832(a)(1), which makes it unlawful to
“steal[], or without authorization appropriate[], take[],
carr[y] away, or conceal[], or by fraud, artifice, or deception obtain[]” a trade secret. 18 U.S.C. § 1832(a)(1). If
pure theft was the theory of the Indictment, Section
1832(a)(1) would have been the far more appropriate
subsection to have been charged. That Agrawal was
charged under Section 1832(a)(2), which criminalizes,
among other things, “convey[ing],” surely means that
embezzling the trade secret and disclosing it to Tower was
within the ambit of the Indictment.
In short, the Indictment fairly alleged that the charged
conduct included Agrawal’s disclosure to Tower via
handwritten notes of descriptions of the code and
SocGen’s HFT system.
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In arguing that the time frame when Agrawal’s criminal intent arose (pre- or post-resignation) and what he had
improperly done (stealing the code, or stealing the code
and improperly conveying information about the code via
the handwritten notes), Agrawal selectively quotes snippets of the Government’s opening statement to suggest
that the Government’s theory about Agrawal’s guilt
evolved during the trial. (Br. 41-43). What he ignores are
the numerous references in the Government’s opening
statement to:
•
Agrawal’s conveying information about SocGen’s
HFT code to Tower, some of which was evidenced
by recordings of meetings between Agrawal and
Tower (Tr. 16-17, 26);
•
Agrawal’s conveying information about SocGen’s
HFT code to Tower in the form of handwritten
notes (Tr. 22-23, 24);
•
Agrawal’s remaining at SocGen after he had been
offered a job at Tower in order to learn as much as
possible about SocGen’s HFT code so as to be able
to replicate it at Tower (Tr. 23-24); and
•
Agrawal’s having the code in his New Jersey
apartment after his resignation (Tr. 24, 26).
The notion that, at the beginning of the trial, the Government only intended to prove that Agrawal stole the code
while he was working at SocGen, but did not intend to
prove his guilt by showing that Agrawal wrongfully kept
it after he resigned is not consistent with either the Indictment or the Government’s opening statement. The same is
true for the notion that the Government never intended to
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prove Agrawal’s guilt by pointing to his unlawfully
conveying information about the code to Tower, including
in the handwritten notes (GX 509-511). The Government’s
opening statement, as well as the Indictment, clearly
disclosed that the Government would prove these matters.
In arguing that there was a constructive amendment,
Agrawal relies on what he suggests is a gap between the
“to wit” clause of paragraph 19 and the proof at trial. Of
course, in doing so, he ignores most of the Indictment
itself. More fundamentally, however, this Court has never
required that the Government prove only what is contained
in a “to wit” clause of an Indictment and nothing more, or
that a conviction may stand only if the “to wit” is proven.
See, e.g., United States v. Dupre, 462 F.3d 131, 140-41
(2d Cir. 2006) (affirming conviction over constructive
amendment claim, where wiring charged in “to wit” clause
was unproven because “the evidence at trial concerned the
same elaborate scheme to defraud investors as was described in the indictment.”); United States v. Klein, Nos.
05-3443-cr(L), 05-4199-cr(CON), 2007 WL 419659, at *2
(2d Cir. Feb. 5, 2007) (summary order) (“[O]ur holdings
show that details contained in a ‘to wit’ clause do not per
se bar a trial court from instructing a jury that it may
convict even if only related and unmentioned details were
proven at trial. Each of these decisions held that deviation
from the details described in the ‘to wit’ clauses was not
fatal to the conviction.” (citing United States v. Rivera,
415 F.3d 284, 287 (2d Cir. 2005); and United States v.
Danielson, 199 F.3d 666, 669 (2d Cir. 1999))). Agrawal
cites no case to the contrary.
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Finally, Agrawal argues that the grand jury could not
have considered what he again calls the Government’s
“alternative theories” because Agrawal was also charged
with interstate transportation of stolen property under 18
U.S.C. § 2314, suggesting some inconsistency between the
two counts of the Indictment. (Br. 51-52). There is no
inconsistency if the jury found that Agrawal stole the code
and transported it from New York to New Jersey in June,
August, and September 2009, but only violated the EEA
later, i.e., after his resignation, when he conveyed, via the
handwritten notes (GX 509-511), details about the code
during the meetings with the Tower computer programmers in March and April 2010. In other words, Agrawal
had the knowledge that the code was stolen at the time he
brought it across state lines, and there is no inconsistency
in a finding that Agrawal only later formed the intent
(required under the EEA but not under the NSPA) to use
the trade secret for his benefit or the benefit of Tower —
an intent he had when he “sketched,” “communicated” and
“conveyed” (along with the many other things alleged in
paragraph 19) the trade secret to Tower.
POINT III
Agrawal’s Conduct Violates the EEA and the
NSPA
Agrawal next argues that the conduct charged in the
Indictment does not fall within the scope of either Section
1832 or Section 2314. The Court should reject the arguments that the Indictment did not state a claim under the
EEA or NSPA. Applying the “plain meaning” of the
relevant terms of the EEA, SocGen’s HFT code, which
traded from Manhattan in markets located in, among other
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places, Illinois, was clearly “related to or included in a
product that is produced for or placed in interstate”
commerce.
Second, Agrawal is incorrect that the NSPA, which
concerns the interstate transportation of stolen “goods,
wares, [and] merchandise,” does not require that the items
stolen be tangible. And, in any event, what Agrawal stole
— thousands of pages of printed out computer code —
was tangible. Finally, there was sufficient evidence of the
existence of a market for HFT code and, therefore, the
Court should reject his sufficiency challenge.*
*
This Point of Agrawal’s brief on appeal raises
arguments substantially similar to those advanced in
United States v. Aleynikov, No. 11-1126-cr. The charges
against Aleynikov arose out of his theft of code relating to
a Goldman Sachs HFT system. Like Agrawal, Aleynikov
was charged with a violation of Section 1832 and a
violation of Section 2314. The district court (Cote, J.)
rejected Aleynikov’s statutory arguments in two opinions.
See United States v. Aleynikov, 785 F. Supp. 2d 46
(S.D.N.Y. 2011); United States v. Aleynikov, 737 F. Supp.
2d 173 (S.D.N.Y. 2010) . However, after argument on
these issues in the Aleynikov appeal, this Court on
February 17, 2012, issued an order 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 the
limited purpose of releasing the defendant
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A. Applicable Law
An indictment may be challenged where it does not
allege a crime within the terms of the statute. United States
v. Pirro, 212 F.3d 86, 91-92 (2d Cir. 2000).
In this case, Agrawal’s challenge to the adequacy of
the Indictment, made for the very first time on appeal,
turns on the interpretation of statutory language. Generally, statutory construction “must begin with the language
employed by Congress and the assumption that the ordinary meaning of that language accurately expresses the
legislative purpose.” United States v. Albertini, 472 U.S.
675, 680 (1985). Where “the statute’s language is plain,
‘the sole function of the courts is to enforce it according to
its terms’” United States v. Ron Pair Enterprises, Inc., 489
U.S. 235, 241 (1989) (quoting Caminetti v. United States,
242 U.S. 470, 485 (1917)), and there is no need to examine the statutory purpose, legislative history, or the rule of
lenity. See Boyle v. United States, 556 U.S. 938, —, 129
S. Ct. 2237, 2246 (2009).
upon the terms of bail that were previously
set. An opinion shall follow in due course.
By order dated March 16, 2012, this Court denied the
Government’s motion for an extension of time to file this
brief until an opinion in Aleynikov issues, but did so
without prejudice to the parties’ filing supplemental
briefing in light of subsequent rulings or opinions by the
Court.
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On appeal, “[t]he sufficiency of the indictment is a
matter of law that is reviewed de novo.” See United States
v. Pirro, 212 F.3d at 92.
B. Discussion
1. Count One — Theft of Trade Secrets
Count One of the Indictment charges Agrawal with
theft of trade secrets under the EEA, in violation of 18
U.S.C. § 1832(a)(2). That section provides:
Whoever, with intent to convert a trade
secret, that is related to or included in a
product that is produced for or placed in
interstate or foreign commerce, to the economic benefit of anyone other than the
owner thereof, and intending or knowing
that the offense will, injure any owner of
that trade secret, knowingly . . . without
authorization copies, duplicates, sketches,
draws, photographs, downloads, uploads,
alters, destroys, photocopies, replicates,
transmits, delivers, sends, mails, communicates, or conveys such information [is guilty
of a crime].
18 U.S.C. § 1832(a)(2) (emphasis added). The EEA does
not define “product” or “produced for or placed in interstate or foreign commerce.”
Agrawal contends that SocGen’s HFT system was
never intended to be a commercial good and, therefore, is
not a “product that is produced for or placed in interstate
commerce.” (Br. 54). Under Agrawal’s view, Section 1832
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can apply only to trade secrets that are, or are intended to
be, embodied in consumer products that are themselves
shipped in interstate commerce. (Br. 54-58).
Agrawal’s argument fails. SocGen’s HFT system,
which traded securities on multiple markets in the United
States, was “produced for” the very purpose of engaging
in interstate commerce. The trading system was created to
trade securities in various markets located in the United
States, such as the Chicago Mercantile Exchance, from
SocGen’s offices located in Manhattan. (Tr. 208-09, 293,
371-76, 462). Indeed, to engage in interstate commerce
was not just the primary purpose of the system; it was the
only purpose of SocGen’s HFT system.
Thus, the trading system is “produced for” interstate
commerce under any commonsense and ordinary reading
of those terms. Indeed, the District Court instructed the
jury — and, unsurprisingly, Agrawal did not object —
that, to satisfy this element of Count One, “it is sufficient
if the government proves that the purpose of the computer
code was to effectuate securities trades, at least some of
which were in interstate or foreign commerce.” (Tr. 1315).
The trading system is also “placed in” interstate and
foreign commerce within the meaning of the EEA, using
the common meaning of those terms. As is clear from
evidence discussed above, the trading system clearly
maintains both a physical presence and an electronic
presence in the stream of commerce as it executes a large
volume of orders to trade securities throughout the United
States. (Tr. 377-78 (testimony that code for DQS and ADP
was stored in Paris)). Thus, the trading system has a very
real presence in the stream of commerce and thus has been
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“placed in” commerce by SocGen, even if it was not
intended to be sold by SocGen.
The Government is not aware of any cases expressly
addressing the issue raised by Agrawal (although the
opinion to be issued in Aleynikov presumably will address
it), and Agrawal cites none in his brief. However, the
legislative history of the EEA unambiguously supports a
broad, and not a narrow, reading of Section 1832’s terms.
In enacting the EEA, Congress sought to “provide a
comprehensive tool for law enforcement personnel to use
to fight theft of trade secrets.” United States v. Yang, 281
F.3d 534, 543 (6th Cir. 2002). Congress recognized both
the importance of intellectual property to the nation’s
economy and the threat posed by the theft of such information. See, e.g., H.R. Rep. No. 104-788, at 4, 6 (1996), as
reprinted in 1996 U.S.C.C.A.N. 4021, 4023-24 (recognizing the growing importance of “proprietary economic
information” and finding that “[a]s the nation moves into
the high-technology, information age, the value of these
intangible assets will only continue to grow”); see also
Opening Statement of Sen. Arlen Specter in S. Hrg.
104-499 (1996), 1996 WL 90824, at 2 (“The development
and production of proprietary economic information is an
integral part of U.S. business and is thus essential to
preserving the competitiveness of the U.S. economy.”).
Indeed, one of Congress’ primary concerns was preventing
employees, such as Agrawal, from stealing their employers’ trade secrets — exactly the situation at issue in this
case. See H.R. Rep. No. 104-788, at 7, as reprinted in
1996 U.S.C.C.A.N. at 4026.
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In passing the EEA, Congress found that there was no
comprehensive criminal law that protected proprietary
information in a thorough and systematic manner. See S.
Rep. 104-359, at 9 (1996), 1996 WL 497065; H.R. Rep.
No. 104-788, at 6-7, as reprinted in 1996 U.S.C.C.A.N. at
4024-25. Accordingly, Congress promulgated the EEA to
“extend vital federal protection to another form of proprietary economic information — trade secrets.” H.R. Rep.
No. 104-788, at 4, as reprinted in 1996 U.S.C.C.A.N. at
4023. In signing the EEA into law, President Clinton
stated that the statute was designed to “protect the trade
secrets of all businesses operating in the United States,
foreign and domestic alike, from economic espionage and
trade secret theft.” Statement by President William J.
Clinton upon Signing H.R. 3723, 32 Weekly Comp. Pres.
Doc. 2040 (Oct. 14, 1996), as reprinted in 1996
U.S.C.C.A.N. 4034, 4034 (emphasis added). This legislative history fully supports the Government’s interpretation
of the EEA and is inconsistent with Agrawal’s interpretation.
Agrawal relies on interpretations of Section 1832
found in the United States Attorney’s Manual (“USAM”)
and the Department of Justice’s Intellectual Property
Crimes Manual (“IP Manual”) to suggest that the EEA is
only available to prosecute trade secrets embodied in
commercial goods. (Br. 56-57). These manuals, which are
not binding and which disclaim any precedential effect, do
not address the specific facts of this case. Instead, for
example, they provide guidance in cases where the product
at issue is still under development and has not yet been
sold in interstate commerce. See USAM 9-50.100; IP
Manual 160-61. They also advise that the EEA does not
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apply to “pure services” including “technical skills” and
“know-how” that are unrelated to any product, which is
clearly not the situation here. IP Manual at 161. What is
clear from the non-fact specific interpretive guidance
provided by the Department of Justice is that the EEA
should be used carefully in prosecuting the theft of
intellectual property related to products under development. They do not support precluding the use of the EEA
to prosecute Agrawal’s theft of an HFT system that was
fully developed, fully functional, and, indeed, highly
profitable for its owner.
In addition, the language in the EEA is similar to
language in the Fair Labor Standards Act, 29 U.S.C. § 201
et seq. (the “FLSA”), that has been interpreted broadly. In
Alstate Const. Co. v. Durkin, 345 U.S. 13, 15-16 (1953),
the Supreme Court interpreted the FLSA — which addresses labor standards in “industries engaged in . . . the
production of goods for commerce,” 29 U.S.C. § 202(a) —
as reaching a Pennsylvania company that created road
surfacing material from Pennsylvania materials for use in
repairing roads in Pennsylvania. Alstate Const. Co. v.
Durkin, 345 U.S. at 15-16 (“We could not hold . . . that the
only way to produce goods ‘for commerce’ is to produce
them for transportation across state lines.”).
Nothing about the EEA’s statutory language or the
legislative history suggests an intent to exclude some trade
secrets from coverage. On the contrary, as noted above,
the legislative history states that Congress intended a
“comprehensive federal criminal statute” protecting trade
secrets, H.R. Rep. 104-788, at 7, as reprinted in 1996
U.S.C.C.A.N. at 4025, and that history is entirely devoid
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of discussion of the commerce-related language of the
statute. Moreover, the legislative history gives as an
example of conduct prohibited by the law “companies
attempting to uncover each others’ bid proposals,” apparently regardless of whether those bids related to the
production of a consumer product, the development of
commercially valuable but secret computer code, or nonfinancial services. H.R. Rep. 104-788, at 5, as reprinted in
1996 U.S.C.C.A.N. at 4024.
In short, both the statutory language and legislative
history show that the EEA was intended to reach
Agrawal’s theft.
2. Count Two — Interstate Transportation
of Stolen Property
The conduct charged in Count Two of the Indictment,
concerning Agrawal’s transportation in the physical form
of thousands of printed out pages of HFT code, also falls
squarely within the NSPA. The relevant subparagraph of
the NSPA provides:
Whoever transports, transmits, or transfers
in interstate or foreign commerce any
goods, wares, merchandise, securities or
money, of the value of $5,000 or more,
knowing the same to have been stolen,
converted or taken by fraud [commits a
crime].
18 U.S.C. § 2314 (emphasis added). Section 2314 does not
define the terms “goods, wares, [or] merchandise.” This
Court, following the Third Circuit, has interpreted these
terms broadly to signify “‘a general and comprehensive
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designation of such personal property or chattels as are
ordinarily a subject of commerce.’” In re Vericker, 446
F.2d 244, 248 (2d Cir. 1971) (Friendly, J.) (quoting United
States v. Seagraves, 265 F.2d 876 (3d Cir. 1959)). In
Vericker, this Court held that “under some circumstances,
mere papers may constitute ‘goods,’ ‘wares,’ or ‘merchandise’” as long as they are “ordinarily bought and sold in
commerce.” Id. at 248 (citation omitted). In United States
v. Bottone, 365 F.2d 389 (2d Cir. 1966) (Friendly, J.), this
Court held that copies and notes of stolen papers reflecting
“manufacturing procedures” for a pharmaceutical company were “goods” within the meaning of Section 2314
because there was an illicit market for them. Id. at 393. If
stolen papers reflecting manufacturing procedures were
goods in Bottone, it cannot be that stolen code printed out
on more than a thousand pages of paper are not also
“goods.”
Agrawal’s theft is thus distinguishable from that at
issue in Aleynikov, because Aleynikov argued that his
entirely electronic transmission of stolen code fell outside
the rule of Bottone. Agrawal’s printed code and notes fall
squarely within the rule of Bottone.
Moreover, district courts in this and other Circuits have
held that Section 2314 applies to confidential business
information for which a market exists, squarely encompassing Agrawal’s theft of the printed out code. See
United States v. Farraj, 142 F. Supp. 2d 484, 487-88
(S.D.N.Y. 2001) (attorney trial plan); United States v.
Caparros, No. 85 Cr. 990 (JFK), 1987 WL 8653, at *3-4
(S.D.N.Y. Mar. 25, 1987) (secret business plans); United
States v. Alavi, No. 07 Cr. 429 (PHX), 2008 WL 1971391,
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at *2 (D. Ariz. May 2, 2008) (stolen software); United
States v. Riggs, 739 F. Supp. 414, 420 (E.D. Ill. 1990)
(confidential information related to emergency 911
services), aff’d on other grounds, 967 F.2d 561 (11th Cir.
1992). But see United States v. Kwan, No. 02 Cr. 241
(DAB), 2003 WL 22973515, at *6 (S.D.N.Y. Dec. 17,
2003) (travel agency’s proprietary contact lists and rate
sheets were not “goods, wares, or merchandise” because
no evidence of a market for such information existed).
Agrawal contends, however, that because the original
HFT code is intangible, it cannot be “a good, ware or
merchandise” under the statute even if it is embodied in
tangible form. (Br. at 59.) In support, Agrawal quotes
Bottone, while ignoring the fact that his argument, if
correct, would have compelled the opposite result in
Bottone. Bottone, 365 F.2d at 393. The facts here are
indistinguishable from Bottone, and thus binding precedent holds that Agrawal’s printouts and notes are covered
by the NSPA.
The Court should reject Agrawal’s suggestion that
Section 2314 cannot be interpreted to apply to intellectual
property. This Court and at least two other courts of appeal
have held that Section 2314 applies to trade secrets — in
other words, intellectual property — for which a market
exists. See Bottone, 365 F.2d at 391 (holding that Section
2314 applies to a pharmaceutical company’s “secret
processes” and “instructions for . . . drugs’ manufacture”);
United States v. Greenwald, 479 F.2d 320, 321 (6th Cir.
1973) (applying Section 2314 to secret chemical formulas); United States v. Seagraves, 265 F.2d at 878 (holding
that Section 2314 applies to an oil company’s confidential
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geophysical and geological maps); cf. United States v.
Martin, 228 F.3d 1, 13-15 (1st Cir. 2000) (upholding
conviction of conspiracy to transport in interstate commerce various stolen trade secrets, including a company’s
proprietary computer software).
Dowling v. United States, 473 U.S. 207 (1985) does
not support Agrawal’s argument. (Br. 58). Dowling
involved bootleg recordings of Elvis Presley singing
copyrighted songs. Id. at 210-11. In Dowling, the Government did not allege that the defendant “wrongfully came
by the phonorecords actually shipped” or that the bootlegged phonorecords “were ‘the same’ as the copyrights in
the musical compositions that he infringed’” and accordingly, the Supreme Court found no violation of Section
2314. Dowling, 473 U.S. at 214. In other words, there was
no item that was both (a) stolen and (b) transported. Here,
there is — both the printed code and the handwritten notes
were stolen or converted, and both were transported across
state lines. Thus, this case passes Dowling’s test.*
*
Moreover, the Tenth Circuit’s view, expressed in
United States v. Brown, 925 F.2d 1301 (10th Cir. 1991),
that Dowling read the statute as including a “tangibility”
requirement, is not correct because, among other things,
such a reading was legislatively overruled when Congress
added the word “transmits” to cover intangible
movements. See Anti-Drug Abuse Act of 1988, Pub. L.
100-690, § 7057(a), 102 Stat. 4181, 4402 (1988); see also
United States v. Piervinanzi, 23 F.3d 670, 678 n.6 (2d Cir.
1994) (“[T]he amendment to § 2314 was designed to
codify appellate court holdings that 18 U.S.C. § 2314 is
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In sum, it is clear that, because Agrawal stole confidential business information in physical form, he was properly
convicted under Section 2314. And even if the form of his
theft were irrelevant, it is still the case that confidential
business information, such as trade secrets, are “goods”
regardless of whether they are transmitted and transported
in tangible or intangible form. Accordingly, the Court
should affirm Agrawal’s conviction on Count Two.
3. Agrawal’s Sufficiency Claim Fails
Agrawal’s final argument is that there was insufficient
evidence of a market for the stolen HFT code. Even if this
were a legal requirement — beyond the code’s being
“goods” — it was easily satisfied in this case.
A defendant challenging the sufficiency of the evidence bears a “heavy burden,” United States v. Gaskin,
364 F.3d 438, 459 (2d Cir. 2004), as the standard of
review is “exceedingly deferential,” United States v.
Hassan, 578 F.3d 108, 126 (2d Cir. 2008). Specifically,
the Court “must view the evidence in the light most
favorable to the government, crediting every inference that
could have been drawn in the government’s favor, and
deferring to the jury’s assessment of witness credibility
and its assessment of the weight of the evidence,” United
States v. Chavez, 549 F.3d 119, 124 (2d Cir. 2008)
not limited to the physical transportation of stolen or
fraudulently acquired money or property.” (citation
omitted) (emphasis added)). In any event, the theft here
was tangible, as discussed above.
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(citations, brackets, and internal quotation marks omitted),
and it must affirm a conviction if “any rational trier of fact
could have found the essential elements of the crime
beyond a reasonable doubt,” Jackson v. Virginia, 443 U.S.
307, 319 (1979). Further, in reviewing the record, the
evidence must be analyzed “not in isolation but in conjunction.” United States v. Diaz, 176 F.3d 52, 89 (2d Cir.
1999).
There was more than sufficient evidence from which
a rational juror could conclude that there was a market for
the kind of documents that Agrawal had stolen from
SocGen. First, the Government proved that Agrawal was
recruited by Tower because he could bring to Tower from
SocGen a highly profitable HFT system. And the reason
that Tower was convinced that Agrawal could clone
SocGen’s system Tower was because he had a detailed
knowledge of SocGen’s HFT systems, which he had
provided to them in the form of handwritten notes derived
from SocGen’s code, and, among other things, had “a lot
of things in actual[] print.” (GX 507). Indeed, Tower was
so convinced of Agrawal’s potential that they agreed to
pay him 20% of Tower’s profits in executing its version of
DQS. Moreover, the evidence showed that code for
another HFT system had been the subject of a sale and
purchase. (Tr. 651). Finally, Agrawal himself testified that
SocGen’s code was valuable because of its secrecy.
(Tr. 1093). This evidence was more than sufficient to
establish a market for the stolen code and notes.
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CONCLUSION
The judgment of conviction should be
affirmed.
Dated: New York, New York
March 30, 2012
Respectfully submitted,
P REET B HARARA,
Southern District of New York,
Attorney for the United States
of America.
T HOMAS G.A. B ROWN,
D ANIEL W. L EVY,
J USTIN S. W EDDLE,
Assistant United States Attorneys,
Of Counsel.
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CERTIFICATE OF COMPLIANCE
Pursuant to Rule 32(a)(7)(C) of the Federal Rules of
Appellate Procedure, the undersigned counsel hereby
certifies that this brief does not comply with the typevolume limitation of Rule 32(a)(7)(B), but is being
submitted pursuant to this Court’s Order of March 30,
2012, granting the Government’s motion to file a brief no
longer than 18,000 words. As measured by the wordprocessing system used to prepare this brief, there are
16,251 words in this brief.
P REET B HARARA,
Southern District of New York
By:
J USTIN S. W EDDLE,
Assistant United States Attorney
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Draft -11/1612010
------------------------------------------------------------------------ x
UNITED STATES OF AMERICA
10 Cr. 417 (JSR)
-v-
SAMARTH AGRAWAL,
Defendant.
------------------------------------------------------------------------ x
THE COURT'S INSTRUCTIONS OF LAW TO THE JURY
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TABLE OF CONTENTS
I. GENERAL INSTRUCTIONS
I.
Duty of the Court
2.
Duty of the Jury
3.
Duty of Impartiality
4.
Burden of Proof
5.
Reasonable Doubt
6.
Direct and Circumstantial Evidence
7.
Witness Credibility
8.
Expert Testimony
9.
Defendant's Testimony
II. THE CHARGES
10.
Theft of Trade Secrets
11.
Interstate Transportation of Stolen Property
12.
Venue
III. CONCLUDING INSTRUCTIONS
13.
Selection of Foreperson; Right to See Exhibits and Hear Testimony;
Communications with Court
14.
Verdict; Need for Unanimity; Duty to Consult
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INSTRUCTION NO. I
Duty of the Court
We are now approaching the most important part of this case, your deliberations.
You have heard all of the evidence in the case, as well as the final arguments of the lawyers for
the parties. Before you retire to deliberate, it is my duty to instruct you as to the law that will
govern your deliberations. As I told you at the start of this case, and as you agreed, it is your
duty to accept my instructions of law and apply them to the facts as you determine them.
Regardless of any opinion that you may have as to what the law may be or ought to be, it
is your sworn duty to follow the law as I give it to you. Also, if any attorney or other person has
stated a legal principle different from any that I state to you in my instructions, it is my
instructions that you must follow.
Because my instructions cover many points, I have provided each of you with a copy of
them, not only so that you can follow them as I read them to you now, but also so that you can
have them with you for reference throughout your deliberations. In listening to them now and
reviewing them later, you should not single out any particular instruction as alone stating the
law, but you should instead consider my instructions as a whole.
2
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INSTRUCTION NO.2
Duty of The JUlY
Your duty is to decide the factual issues in the case and arrive, if you can, at a verdict.
You, the members of the jury, are the sole and exclusive judges of the facts. You pass upon the
weight of the evidence; you determine the credibility of the witnesses; you resolve such conflicts
as there may be in the testimony; and you draw whatever reasonable inferences you decide to
draw from the facts as you determine them.
In determining the facts, you must rely upon your own recollection of the evidence. To
aid your recollection, we will send you all the exhibits at the start of your deliberations, and if
you need to review particular items oftestimony, we can also arrange to provide them to you in
transcript or read-back form. But please remember that none of what the lawyers have said in
their opening statements, in their closing arguments, in their objections, or in their questions, is
evidence. Nor is anything I may have said evidence.
The evidence before you consists of just three things: the testimony given by witnesses
that was received in evidence, the exhibits that were received in evidence, and any stipulations of
the parties that were received in evidence.
Testimony consists of the answers that were given by the witnesses to the questions that
were permitted. Please remember that questions, although they may provide the context for
answers, are not themselves evidence; only answers are evidence, and you should therefore
disregard any question to which I sustained an objection. Also, you may not consider any
answer that I directed you to disregard or that I directed be stricken from the record. Likewise,
you may not consider anything you heard about the contents of any exhibit that was not received
3
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in evidence.
Furthermore, you should be careful not to speculate about matters not in evidence. For
example, there is no legal requirement that the Government prove its case through a particular
witness or by use of a particular law enforcement technique. Nor should you speculate about
why one or another person whose name may have figured in the evidence is not part of this trial
or what his or her situation may be. Your focus should be entirely on assessing the evidence that
was presented here for your consideration.
It is the duty of the attorney for each side of a case to object when the other side offers
testimony or other evidence that the attorney believes is not properly admissible. Counsel also
have the right and duty to ask the Court to make rulings of law and to request conferences at the
side bar out of the hearing of the jury. All such questions of law must be decided by me. You
should not show any prejudice against any attorney or party because the attorney objected to the
admissibility of evidence, or asked for a conference out of the hearing ofthe jury, or asked me
for a ruling on the law.
I also ask you to draw no inference from my rulings or from the fact that upon occasion I
asked questions of certain witnesses. My rulings were no more than applications of the law and
my questions were only intended for clarification or to expedite matters. You are expressly to
understand that I have no opinion as to the verdict you should render in this case.
4
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INSTRUCTION NO.3
You are to perfonn your duty of finding the facts without bias or prejudice as to any
party. You are to perfonn your final duty in an attitude of complete fairness and impartiality.
You are not to be swayed by rhetoric or emotional appeals.
The fact that the prosecution is brought in the name of the United States of America
entitles the Government to no greater consideration than that accorded any other party. By the
same token, it is entitled to no less consideration. All parties, whether the Government or
individuals, stand as equals at the bar of justice.
Please also be aware that the question of possible punishment is the province of the
judge, not the jury, and therefore it should not in any way enter into or influence your
deliberations. Your duty is to weigh the evidence and not be affected by extraneous
considerations.
It must be clear to you that if you were to let bias, or prejudice, or fear, or sympathy, or
any other irrelevant consideration interfere with your thinking, there would be a risk that you
would not arrive at a true and just verdict. So do not be guided by anything except clear thinking
and calm analysis of the evidence.
5
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INSTRUCTION NO.4
Presumption of Innocence and Burden of Proof
The defendant here, Samarth Agrawal, is charged with two crimes or "counts" as we call
them: theft of trade secrets and interstate transportation of stolen property. I will instruct you
shortly about the elements of each of these two charges. Please bear in mind, however, that a
charge is not itself evidence of anything. The defendant has pleaded not guilty to the charges
against him. To prevail, the Government must prove each essential element of each charge
beyond a reasonable doubt. This burden never shifts to the defendant, for the simple reason that
the law presumes a defendant to be innocent and never imposes upon a defendant in a criminal
case the burden or duty of calling any witness or producing any evidence. In other words, as to
each charge, a defendant starts with a clean slate and is presumed innocent until such time, if
ever, that you as ajury are satisfied that the Government has proven that he is guilty of that
charge beyond a reasonable doubt.
6
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INSTRUCTION NO.5
Reasonable Doubt
Since, in order to convict a defendant of a given charge, the Government is required to
prove that charge beyond a reasonable doubt, the question then is: what is a reasonable doubt?
The words almost define themselves. It is a doubt based upon reason. It is doubt that a
reasonable person has after carefully weighing all of the evidence. It is a doubt that would cause
a reasonable person to hesitate to act in a matter of importance in his or her personal life. Proof
beyond a reasonable doubt must, therefore, be proof of a convincing character that a reasonable
person would not hesitate to rely upon in making an important decision.
A reasonable doubt is not caprice or whim. It is not speculation or suspicion. It is not an
excuse to avoid the performance of an unpleasant duty. The law does not require that the
Government prove gUilt beyond all possible doubt: proof beyond a reasonable doubt is sufficient
to convict.
If, after fair and impartial consideration of the evidence, you have a reasonable doubt as
to a defendant's guilt with respect to a particular charge against him, you must find that
defendant not guilty of that charge. On the other hand, if after fair and impartial consideration of
all the evidence, you are satisfied beyond a reasonable doubt of a defendant's guilt with respect
to a particular charge against him, you should find that defendant guilty of that charge.
7
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INSTRUCTION NO.6
In deciding whether or not the Government has met its burden of proof, you may
consider both direct evidence and circumstantial evidence.
Direct evidence is evidence that proves a disputed fact directly. For example, where a
witness testifies to what he or she saw, heard, or observed, that is called direct evidence.
Circumstantial evidence is evidence that tends to prove a disputed fact by proof of other
facts. To give a simple example, suppose that when you came into the courthouse today the sun
was shining and it was a nice day, but the courtroom blinds were drawn and you could not look
outside. Then later, as you were sitting here, someone walked in with a dripping wet umbrella
and, soon after, somebody else walked in with a dripping wet raincoat. Now, on our assumed
facts, you cannot look outside of the courtroom and you cannot see whether or not it is raining.
So you have no direct evidence of that fact. But, on the combination of the facts about the
umbrella and the raincoat, it would be reasonable for you to infer that it had begun raining.
That is all there is to circumstantial evidence. Using your reason and experience, you
infer from established facts the existence or the nonexistence of some other fact. Please note,
however, that it is not a matter of speculation or guess: it is a matter oflogical inference.
The law makes no distinction between direct and circumstantial evidence.
Circumstantial evidence is of no less value than direct evidence, and you may consider either or
both, and may give them such weight as you conclude is warranted.
8
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INSTRUCTION NO.7
Witness Credibility
It must be clear to you by now that counsel for the Government and counsel for the
defendant are asking you to draw very different conclusions about various factual issues in the
case. Deciding these issues will involve making judgments about the testimony of the witnesses
you have listened to and observed. In making these judgments, you should carefully scrutinize
all of the testimony of each witness, the circumstances under which each witness testified, and
any other matter in evidence that may help you to decide the truth and the importance of each
witness's testimony.
Your decision whether or not to believe a witness may depend on how that witness
impressed you. How did the witness appear? Was the witness candid, frank, and forthright; or,
did the witness seem to be evasive or suspect in some way? How did the way the witness
testified on direct examination compare with how the witness testified on cross-examination?
Was the witness consistent or contradictory? Did the witness appear to know what he or she was
talking about? Did the witness strike you as someone who was trying to report his or her
knowledge accurately? These are examples of the kinds of common sense questions you should
ask yourselves in deciding whether a witness is, or is not, truthful.
How much you choose to believe a witness may also be influenced by the witness's bias.
Does the witness have a relationship with the Government or the defendant that may affect how
he or she testified? Does the witness have some incentive, loyalty, or motive that might cause
him or her to shade the truth? Does the witness have some bias, prejudice, or hostility that may
cause the witness to give you something other than a completely accurate account of the facts he
or she testified to?
9
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In this regard, you have heard testimony from various witnesses who testified in
accordance with non-prosecution agreements with the Government and are now cooperating
with the Government. The law permits the use of testimony from cooperating witnesses; indeed,
such testimony, if found truthful by you, may be sufficient in itself to warrant conviction if it
convinces you of the defendant's guilt beyond a reasonable doubt. However, the law requires
that the testimony and motives of a cooperating witness be scrutinized with particular care and
caution. After carefully scrutinizing the testimony of a cooperating witness and taking account
of its special features, you may give it as little or as much weight as you deem appropriate.
Going back to witnesses generally, you should also consider whether a witness had an
opportunity to observe the facts he or she testified about. Also, as to all witnesses, you should
consider whether the witness's recollection of the facts stands up in light of the other evidence in
the case.
In other words, what you must try to do in deciding credibility is to size up a person just
as you would in any important matter where you are trying to decide if a person is truthful,
straightforward, and accurate in his or her recollection.
10
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INSTRUCTION NO.8
Expert Testimony
The law permits parties to offer testimony from witnesses who by education or
experience profess to expertise in a specialized area of knowledge. In this case, the Government
has offered the testimony of Benjamin Van Vliet as an expert on high frequency trading systems.
Expert testimony is presented to you on the theory that someone who is expert in the field may
be able to assist you in understanding specialized aspects of the evidence.
However, your role in judging credibility and assessing weight applies just as much to
experts as to other witnesses. When you consider the expert opinions that were received in
evidence in this case, you may give them as much or as little weight as you think they deserve.
For example, an expert witness necessarily bases his or her opinions, in part or in whole, on what
the expert was told by others, and you may conclude that the weight given the expert's opinions
may be affected by how accurate or inaccurate that underlying information is. More generally, if
you find that the opinions of an expert were not based on sufficient data or experience, or if you
should conclude that the trustworthiness or credibility of an expert is questionable, or if the
opinion of the expert was outweighed, in your judgment, by other evidence in the case, then you
may, if you wish, disregard the opinions of the expert, either entirely or in part. On the other
hand, if you find that an expert is credible, and that the expert's opinions are based on sufficient
data and experience, and that the other evidence does not give you reason to doubt the expert's
conclusions, you may, if you wish, rely on that expert's opinions and give them whatever weight
you deem appropriate.
11
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INSTRUCTION NO.9
Defendant's Testimony
Mr. Agrawal elected to testify in this case. A defendant has a deep personal interest in
the outcome of his case and you should therefore scrutinize his testimony with great care and
caution. However, as in the case of any other witness, the fact that a witness has a special
interest or motive does not mean that he is incapable of telling the truth. Rather, as with all
witnesses, it is up to you to determine whether or not to credit Mr. Agrawal's testimony, taking
account of all relevant factors. Also, please remember that the fact that Mr. Agrawal has chosen
to testify does not shift the burden of proof, which remains with the Government at all times.
12
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II. THE CHARGE
INSTRUCTION NO.1 0
With these preliminary instructions in mind, let us tum to the two specific charges
against the defendant, each of which must be considered separately. In Count One, Mr. Agrawal
is charged with theft of trade secrets.
In order to sustain its burden of proof with respect to this charge, the Government must
prove beyond a reasonable doubt each of the following three elements:
First, that the computer code used in the high frequency trading business of Societe
Generale was a trade secret belonging to Societe Generale;
Second, that at some time between June 2009 and April 2010 the defendant stole Societe
Generale's trade secret, that is, without authorization from Societe Generale he intentionally
misappropriated the computer code to his own use and/or the use of Tower, knowing this would
injure Societe Generale; and
Third, that, as a factual matter, the computer code was related to a product that was, at
least in part, produced for, or placed in, interstate or foreign commerce.
As to the first element, any form of specialized information can constitute a trade secret
if two requirements are met. First, the owner of the information must have taken reasonable
measures under the circumstances to keep the information secret. Second, the information must
be valuable in part because it is secret.
As to the second element, misappropriating a trade secret includes copying, duplicating,
or otherwise replicating the trade secret, and to do so "without authorization" means that Societe
Generale did not approve its being copied by the defendant for his intended purpose. The
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defendant's intended purpose, to satisfy this element, must be to use it for the benefit of someone
other than Societe Generale, knowing that to do so would injure Societe Generale ,
Finally, as to the third element, the Government must prove that the trade secret was
related to a product that is produced for, or placed in, interstate or foreign commerce.
"Interstate" commerce means commerce between businesses or individuals in different states.
"Foreign" commerce me~s commerce with or between businesses or individuals outside of the
United States. For the Government to satisfy this element, it is sufficient if the Government
proves that the purpose of the computer code was to effectuate securities trades, at least some of
which were in interstate or foreign commerce.
14
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Add. 16
INSTRUCTION NO. 11
Turning next to Count 2, this count charges the defendant with transporting stolen
property in interstate commerce.
In order for Mr. Agrawal to be guilty of this charge, the Government must prove beyond
a reasonable doubt each of four elements.
First, that at some time between June 2009 and April 2010 the defendant transported,
transmitted, or transferred across state lines some of Societe Generale's property -- specifically,
some or all of the computer code used by Societe Generale in its high frequency trading
operation;
Second, that the computer code was stolen (in the sense of misappropriated, as I have
previously explained that term to you);
Third, that the defendant, knowing the computer code was stolen, purposefully
transported it in interstate commerce; and
Fourth, that the value of the trade secret was $5,000 or more.
15
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INSTRUCTION NO. 12
Venue
In addition, before a defendant can be convicted of either charge, the Government must
establish what is called "venue," that is, that some act pertaining to the charge occurred in the
Southern District of New York. The Southern District of New York is the judicial district that
includes Manhattan, the Bronx, and Westchester, Rockland, Putnam, Orange, Dutchess, and
Sullivan Counties. On the issue of venue -- and on this issue alone -- the Government can meet
its burden by a preponderance of the evidence, that is, by showing that it was more likely than
not that an act pertaining to a given crime occurred in the Southern District of New York.
16
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INSTRUCTION NO. 13
Selection of Foreperson; Right to See Exhibits and Hear Testimony;
Communications with the Court
You will shortly retire to the jury room to begin your deliberations. As soon as
you get to the jury room, please select one of your number as the foreperson, to preside over
your deliberations and to serve as your spokesperson if you need to communicate with the Court.
You will be bringing with you into the jury room a copy of my instructions oflaw, and a
verdict form on which to record your verdict. In addition, we will send into the jury room all of
the exhibits that were admitted into evidence. If you want any of the testimony provided, that
can also be done, either in transcript or read-back form. But, please remember that it is not
always easy to locate what you might want, so be as specific as you possibly can be in requesting
portions of the testimony.
Any of your requests, in fact any communication with the Court, should be made to me in
writing, signed by your foreperson, and given to the Marshal, who will be available outside the
jury room throughout your deliberations. After consulting with counsel, I will respond to any
question or request you have as promptly as possible, either in writing or by having you return to
the courtroom so that I can speak with you in person.
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INSTRUCTION NO. 14
You should not, however, tell me or anyone else how the jury stands on any issue until
you have reached your verdict and recorded it on your verdict form. As I have already
explained, the Government, to prevail on the charges against the defendant, must prove each
essential element of that charge beyond a reasonable doubt. If the Government succeeds in
meeting this burden, your verdict should be guilty; if it fails, your verdict must be not guilty.
Each of you must decide the case for yourself, after consideration, with your fellow
jurors, of the evidence in the case; and your verdict must be unanimous. In deliberating, bear in
mind that while each juror is entitled to his or her opinion, each should exchange views with his
or her fellow jurors. That is the very purpose of jury deliberation -- to discuss and consider the
evidence; to listen to the arguments of fellow jurors; to present your individual views; to consult
with one another; and to reach a verdict based solely and wholly on the evidence. If, after
carefully considering all the evidence and the arguments of your fellow jurors, you entertain a
conscientious view that differs from the others, you are not to yield your view simply because
you are outnumbered. However, you should not hesitate to change an opinion which, after
discussion with your fellow jurors, now appears to you erroneous.
In short your verdict must reflect your individual views and must also be unanimous.
This completes my instructions of law.
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Add. 20
Draft-1111712010
·----- x
UNITED STATES OF AMERICA
-v-
10 Cr. 417 (JSR)
SAMARTHAGRAWAL,
Defendant.
------- X
TIIE COURT'S INSTRUCTIONS OF LAW TO TilE JURY
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TABLE OF CONTENTS
L
Duty of the Court
2.
Duty ofthe Jury
3.
4.
Burden ofProof
5.
Reasonable Doubt
6.
7.
Witness Credibility
8.
Expert Testimony
II. THE CHARGES
9.
Theft ofTrade Secrets
10.
11.
Venue
12.
Selection ofForeperson; Right to See Exhibits and HearTestimony;
Communications with Court
13.
1
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INSTRUCTION NO. 1
Duty of the Court
We
are
now approaching the most important part of this case, your deliberations
You have heard all of the evidence in the case,
as
well
as
.
the final argwnents of the lawyers for
the parties. Before you retire to deliberate, it is my duty to instruct you
as to
the law that will
govern your deliberations. As I told you at the start of this case, and as you agreed, it is your
duty to accept my instructions of law and apply them to the facts as you determine them.
Regardless of any opinion that you may have as to what the law may be or ought to be, it
is your sworn duty to follow the law as I give it to you. Also, if any attorney or other person has
stated a legal principle different from any that I state to you in my instructions, it is my
instructions that you must follow.
Because my instructions cover many points, I have provided each of you with a copy of
them, not only so that you
can
follow them as I read them to you now, but also so that you can
have them with you for reference throughout your deliberations. In listening to them now and
reviewing them later, you should not single out any particular instruction
law, but you should instead consider my instructions as a whole.
2
as
alone stating the
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INSTRUCTION NO. 2
Duty of The Jwy
Your duty is to decide the factual issues in the case and arrive, if you can, at a verdict.
You, the members of the jury,
are
the sole and exclusive judges of the facts . You pass upon the
weight of the evidence; you determine the credibility of the witnesses; you resolve such conflicts
as
there may be in the testimony; and you draw whatever reasonable inferences you decide to
draw from the facts as you determine them.
In determining the facts, you must rely upon your own recollection of the evidence. To
aid your recollection, we will send you all the exhi b its at the start of your deheerations, and if
you need to review particular items of testimony, we can also arrange to provide them to you in
transcript or read-back form. But please remember that none of what the lawyers have said in
their opening statements, in their closing arguments, in their objections, or in their questions, is
evidence. Nor is anything I may have said evidence.
The evidence before you consists ofjust three things: the testimony given by witnesses
that was received in evidence, the exhibits that were received in evidence, and any stipulations of
the parties that were received in evidence.
Testimony consists of the
answers
that were given by the witnesses to the questions that
were permitted. Please remember that questions, although they may provide the context for
answers, are not themselves evidence; only
answers
are evidence, and you should therefore
disregard any question to which I sustained an objection. Also, you may not consider any
answer
that I directed you to disregard or that I directed be stricken from the record.
Likewise,
you may not consider anything you heard about the contents of any exhibit that was not received
3
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in evidence.
Furthermore, you should be careful not to speculate about matters not in evidence. For
example, there is no legal requirement that the Government prove its case through a particular
witness or by use of a particular law enforcement technique. Nor should you speculate about
why one or another person whose name may have figured in the evidence is not part of this trial
or
what his or her situation may be. Your focus should be entirely on assessing the evidence that
was presented here for your consideration.
It is the duty of the attorney for each side of a
case
to object when the other side offers
testimony or other evidence that the attorney believes is not properly admissible. Counsel also
have the right and duty to ask the Court to make rulings of law and to request conferences at the
side bar out of the hearing of the jury. All such questions of law must be decided by me. You
should not show any prejudice against any attorney or party because the attorney objected to the
admissibility of evidence, or asked for a conference out of the hearing of the jury, or asked me
for a ruling on the law.
I also ask you to draw no inference from my rulings or from the fact that upon occasion I
asked questions of certain witnesses. My rulings were no more than applications of the law and
my questions were only intended for clarification or to expedite matters. You
are
understand that I have no opinion as to the verdict you should render in this case.
4
expressly to
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INSTRUCTION NO. 3
You are to perform your duty of finding the facts without bias or prejudice
as
to any
party. You are to perform your final duty in an attitude of complete fairness and impartiality.
You are not to be swayed by rhetoric or emotional appeals.
The fact that the prosecution is brought in the name of the United States of America
entitles the Government to no greater consideration than that accorded any other party. By the
same token, it is entitled to no less consideration. All parties, whether the Government or
individuals, stand
as
equals at the bar ofjustice.
Please also be aware that the question of possible punishment is the province of the
judge, not the jury, and therefore it should not in any way enter into or influence yom
deliberations. Yom duty is to weigh the evidence and not be affected by extraneous
considerations.
It must be clear to you that if you were to let bias, or prejudice, or fear, or sympathy, or
any other irrelevant consideration interfere with your thinking, there would be a risk that you
would not arrive at a true and just verdict. So do not be guided by anything except clear thinking
and calm analysis of the evidence.
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INSTRUCTION NO. 4
Presumption of Innocence and Bmden of Proof
The defendant here, Samarth Agrawal, is charged with two crimes or "counts" as we call
them: theft of trade secrets and interstate transportation of stolen property. I will instruct you
shortly about the elements of each of these two charges. Please bear in mind, however, that a
charge is not itself evidence of anything. The defendant has pleaded not guilty to the charges
against him. To prevail, the Government must prove each essential element of each charge
beyond
a
reasonable doubt. This burden never shifts to the defendant, for the simple reason that
the law presumes a defendant to be innocent and never imposes upon a defendant in a criminal
case
the burden
each charge,
a
ever, that you
or
duty of calling any witness or producing any evidence. In other words,
to
defendant starts with a clean slate and is presumed innocent until such time, if
as a jury
charge beyond
as
a
are satisfied that the Government has proven that he is guilty ofthat
reasonable doubt.
6
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INSTRUCTION NO. 5
Reasonable Doubt
Since, in order to convict a defendant of a giv en charge, the Government is required to
prove that charge beyond a reasonable doubt, the question then is: what is a reasonable doubt?
The words almost define themselves. It is a doubt based upon reason. It is doubt that
a
reasonable person has after carefully weighing all of the evidence. It is a doubt that would cause
a reasonable
person to hesitate to act in a matter of importance in his or her personal life. Proof
beyond a reasonable doubt must, therefore, be proof of a convincing character that a reasonable
person would not hesitate to rely upon in making an important decision.
A reasonable doubt is not caprice or whim. It is not speculation or suspicion. It is not
an
excuse to avoid the performance of an unpleasant duty. The law does not require that the
Government prove guilt beyond all possible doubt: proof beyond
to
a reasonable
doubt is sufficient
convict.
If, after fair and impartial consideration of the evidence, you have a reasonable doubt as
to a defendant ' s
guilt with respect to a partictilar charge against him, you must find that
defendant not guilty ofthat charge. On the other hand, if after fair and impartial consideration of
all the evidence, you are satisfied beyond a reasonable doubt of a defendant's guilt with respect
to
a
particular charge against him, you should find that defendant guilty of that charge.
7
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INSTRUCTION NO. 6
In deciding whether or not the Government
bas met its burden of proof, you may
consider both direct evidence and circumstantial evidence.
Direct evidence is evidence that proves a disputed fact directly. For example, where a
witness testifies to what he or she saw, heard, or observed, that is called direct evidence.
Circumstantial evidence is evidence
that tends to prove a disputed fact by proof of other
facts. To give a simple example, suppose that when you came into the courthouse today the sun
was shining and it was a nice day, but the cowtroom blinds were drawn and you could not look
outside. Then later, as you
were sitting here, someone walked in with a dripping wet umbrella
and, soon after, somebody else walked in with a dripping wet raincoat. Now, on our assumed
facts, you
cannot
look outside of the courtroom and you cannot see whether or not it is raining.
So you have no direct evidence of that fact. But, on the combination of the facts about the
umbrella and the raincoat, it would be reasonable for you to infer that it had begun raining.
That is all there is to circumstantial evidence. Using your reason and experience, you
infer from established facts the existence or the nonexistence of some other fact. Please note,
however,
that it is not a matter of speculation or guess: it is a matter of logical inference.
The law makes no distinction between direct and circumstantial evidence.
Circumstantial evidence
is of no less value than direct evidence, and you may consider either or
both, and may give them such weight as you conclude is warranted.
8
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INSTRUCTION NO. 7
Witness Credibility
It must be clear to you by now that counsel for the Government and counsel for the
defendant are asking you to draw very different conclusions about various factual issues in the
case. Deciding these issues will involve making judgments about the testimony of the witnesses
you have listened to and observed. In making these judgments, you should carefully scrutinize
all of the testimony of each witness, the circumstances under which each witness testified, and
any other matter in evidence that may help you to decide the truth and the importance of each
witness's testimony.
Your decision whether or not to believe a witness may depend on how that witness
impressed you. How did the witness appear? Was the witness candid, frank, and forthright; or,
did the witness seem to be evasive
or suspect
in some way? How did the way the witness
testified on direct examination compare with how the witness testified on cross-examination?
Was the witness consistent or contradictory? Did the witness appear to know what he
or she
was
talking about? Did the witness strike you as someone who was trying to report his or her
knowledge accurately? These are examples of the kinds of common sense questions you should
ask yourselves in deciding whether a witness is, or is not. truthful.
How much you choose to believe a witness may also be influenced by the witness's bias.
Does the witness have a relationship with the Government or the defendant that may affect how
he or she testified? Does the witness have some incentive, loyalty, or motive that might cause
him or her to shade the truth? Does the witness have some bias, prejudice, or hostility that may
cause the witness to give you something other than a completely accurate account of the facts he
or she testified to?
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In this regard, you have heard testimony from various witnesses who testified in
accordance with non-prosecution agreements with the Government and
are
now cooperating
with the Government The law permits the use of testimony from cooperating witnesses; indeed,
such testimony, if found truthful by you, may be sufficient in itself to warrant conviction if it
convinces you of the defendant's guilt beyond a
reasonable
doubt. However, the law requires
that the testimony and motives of a cooperating witness be scrutinized with particular care and
caution. After carefully scrutinizing the testimony of a cooperating witness and taking account
of its special features, you may give it
as
little or as much weight
as
Going back to witnesses generally, you should also consider whether a witness had an
opportunity to observe the facts he or she testified about. Also, as to all witnesses, you should
consider whether the witness's recollection of the facts stands up in light of the other evidence in
the
case.
As for the defendant, although he had no obligation to testify, he chose to do so. You
must therefore scrutinize and evaluate his testimony just as you would the testimony of any
important witness, taking account of all the factors I have previously described.
In other words, what you must try to do in deciding the credibi l ity of each witness is to
size up a person just as you would in any important matter where you
are
person is truthful, straightforward, and accurate in his or her recollection.
10
trying to decide if a
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INSTRUCTION NO. 8
Expert Testimony
The law permits parties to offer testimony from witnesses who by education or
experience profess to expertise in a specialized area of knowledge. In this case, the Gov ernment
has offered the testimony of Benjamin Van Vliet as an expert on high frequency trading systems.
Expert testimony is presented to you on the theory that someone who is expert in the field may
be able to assist you in understanding specialized aspects of the evidence.
However, your role in judging crechl>ility and assessing weight applies just as much to
experts as to other witnesses. When you consider the expert opinions that were received in
evidence in this
case,
you may give them as much or as little weight as you think they deserve.
For example, an expert witness necessarily bases his or her opinions, in part or in whole, on what
the expert was told by others, and you may conclude that the weight given the expert's opinions
may be affected by how accurate or inaccurate that underlying information is. More generally, if
you find that the opinions of an expert were not based on sufficient data or experience, or if you
should conclude that the trustworthiness or credibility of an expert is questionable, or if the
opinion of the expert was outweighed, in your judgment, by other evidence in the case, then you
may, if you wish, disregard the opinions of the expe� either entirely or in part. On the o ther
hand, if you find that an expert is credible, and that the expert's opinions are based on sufficient
data and experience, and that the other evidence does not give you
reason
to doubt the expert's
conclusions, you may, if you wish, rely on that expert's opinions and give them whatever weight
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II. THE CHARGE
INSTRUCTION NO. 9
With these preliminary instructions in mind, l et us tum to the two specific charges
against the defendant, each of which must be considered separately. In Count One, Mr. Agrawal
is charged with theft of trade secrets.
In order to
sustain its burden of proof with respect to this charge the Government must
,
prove beyond a reasonable doubt each of the following four elements:
� that the computer code used in the high frequency trading business of Societe
Generale was a trade secret belonging to Societe Generale;
Second, that at some time between June2009 and April201 0 the defendant copied and
removed the computer code from the offices of Societe Generale without authorization from
Societe Generale;
Third, that when he removed the code, or at any point thereafter when he was still in
unauthorized possession of the computer code, the defendant formed the intent to convert the
code to the economic benefit of himself or others, knowing or intending that this would injure
Societe Genenue;
Fourth, that the computer code was related to, or included in, a product that was, at least
in part, produced for, or placed in, interstate or foreign commerce.
As to the first element, any form of specialized information
can
constitute a trade secret
if two requirements are m et First, the owner of the information must have taken reasonable
measures 1mder the circumstances to keep the information secret. Second, the information must
be valuable in part because it is secret.
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As to the second element, "without authorization" means that Societe Genenue did not
approve the removal of the computer code by the defendant for his intended purpose. For
example.
an
employer might approve
an
employee taking a trade secret home to work on it for
the employer's benefit; but if the employee then starts using the trade
secret
for his own benefit,
at that point the removal becomes unauthorized.
As to the third element, an intent to "convert." in the context of this case, is an intent to
use Societe Generale's trade secret for the economic benefit of some other person (such as the
defendant or Tower Management) and to the detriment of Societe Gen.Crale.
Finally, as to the fourth element, "interstate" commerce means commerce between
businesses
or
individuals in different states, and "foreign" commerce means commerce
with or
between businesses or individuals outside of the United States. For the Government to satisfY
this element. it is sufficient if the Government proves that the pmpose ofthe computer code was
to effectuate securities trades, at least some of which were in interstate or foreign commerce.
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INSTRUCTION NO. I 0
Interstate Trangrtation of Stolen Property
Turning next to Count 2, this count charges the defendant with transporting stolen
property in interstate commerce.
In order for Mr.
a reasonable
Agrawal to be guilty of this charge, the Government must prove beyond
doubt each of four elements.
Eim, that at some time between June 2009 and April 2010 the defendant transported,
transmitte<L or transferred across state lines some of Societe Generale's property- specifically,
some or all of the computer code used by Societe Genera.Ie in its high frequency trading
operation;
Second, that the computer code
was
stolen (in the sense of converted,
as
I have
previously explained that term to you);
1J!in!, that the defendant, knowing the computer code
was
transported it in interstate commerce; and
Fourth. that the value of the property was $5,000 or more.
14
stolen, purposefully
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INSIRUCTIONNO. II
Venue
In addition, before a defendant can be convicted of either charge, the Government must
establish what is called ''venue," that is, that some act pertaining to the charge occurred in the
Southern District ofNew York. The Southern District ofNew York is the judicial district that
includes Manhattan, the Bronx, and Westchester, Roc.kland, Putnam, Orange, Dutchess, and
Sullivan Counties. On the issue of venue - and on this issue alone - the Government can meet
its burden by a preponderance of the evidence, that is, by showing that it was more likely than
not that an act pertaining to
a
given crime occmred in the Southern District ofNew York.
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INSTRUCTION NO. 12
Selection ofForeperson; Ria:ht to See Exhibits and Hear Testimony:
Communications with the Court
You will shortly retire to the jury room to begin your deliberations. As soon
you get to the jury roo� please select one of your number
your deliberations and to serve
as
as
as
the foreperson, to preside over
your spokesperson if you need to communicate with the Court.
You will be bringing with you into the jmy room a copy of my instructions of law, and a
verdict fonn on which to record your verdict. In addition, we will send into the jury room all of
the exhibits that
were
admitted into evidence. If you want any of the testimony provided, that
can also be done, either in transcript or read-back form. But, please remember that it is
always easy to locate what you might want,
so
be
as
specific
as
you possibly
can
not
be in requesting
portions of the testimony.
Any of your requests, in fact any communication with the Court, should be made to me in
writing, signed by your foreperson, and given to the Marshal, who will be available outside the
jury room throughout your deliberations. After consulting with counsel, I will respond to any
question or request you have
the courtroom so that I
can
as
promptly
as
possible, either in writing or by having you return to
speak with you in person.
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INS1RUCTION NO. 13
Verdict Need for Unanimity; DutY to Consult
You should not, however, tell me or anyone else how the jmy stands on any issue until
you have reached your verdict and recorded it on yom verdict form. As I have already
explained, the Gov ernment, to prevail on the charges against the defendant, must prove each
essential element of that charge beyond a reasonable doubt. If the Government succeeds in
meeting this bmden, your verdict should be
guilty; if it fails, yom verdict must be not guilty.
Each of you must decide the case for yourself, after consideration, with your fellow
jurors, of the evidence in the case; and yom verdict must be unanimous. In deliberating, bear in
mind that while each juror is entitled fu his or her opinion, each should exchange views with his
or her fellow jurors. That is the very purpose of jury deliberation
-
to
discuss and consider the
evidence; to listen to the arguments of fellow jurors; to present your individual views; to consult
with one another; and to reach a verdict based solely and wholly on the evidence. If, after
carefully considering all the evidence and the arguments of yom fellow jurors, you entertain a
conscientious view that differs from the others, you are not to yield yom view simply because
you
are
outnumbered. However, you should not hesitate to change an opinion whic� after
discussion with yom fellow jurors, now appears to you erroneous.
In short your verdict must reflect your individual views and must also be unanimous.
This completes my instructions of law.
17
117

United States Court of Appeals

Transcription

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