Argued: June 21, 2012
On appeal from a judgment of conviction entered after a jury trial in the United States District Court for the Southern District of New York (Rakoff, J.), defendant challenges the legal sufficiency of charges that he violated the Economic Espionage Act, see 18 U.S.C. § 1832, and the National Stolen Property Act, see id. § 2314, particularly in light of our recent decision in United States v. Aleynikov, 676 F.3d 71 (2d Cir. 2012). He further challenges the sufficiency of the evidence to prove the § 2314 charge, complains of errors in the jury charge, and argues constructive amendment of the indictment and prejudicial variance in proof.
Marshall A. Mintz, Mintz & Oppenheim LLP, New York, New York, for Defendant-Appellant.
Daniel W. Levy (Thomas G. A. Brown, Justin S. Weddle, on the brief), Assistant United States Attorneys, for Preet Bharara, United States Attorney for the Southern District of New York, New York, New York, for Appellee.
Before: Pooler, Raggi, and Lynch, Circuit Judges.
Reena Raggi, Circuit Judge
Defendant Samarth Agrawal was entrusted by his former employer, the French bank Société Générale ("SocGen"), with access to confidential computer code that the bank used to conduct high frequency securities trades. Agrawal abused this trust by printing the code onto thousands of sheets of paper, which he then physically removed from the bank's New York office to his New Jersey home, where he could use them to replicate SocGen's trading systems for a competitor who promised to pay him hundreds of thousands of dollars. The question on this appeal is thus not whether Agrawal is a thief. He is. The question is whether Agrawal properly stands convicted for his thievery in the United States District Court for the Southern District of New York (Jed S. Rakoff, Judge) under specific federal laws, namely, the Economic Espionage Act ("EEA"), see 18 U.S.C. § 1832, and the National Stolen Property Act ("NSPA"), see id. § 2314.
Agrawal argues that the charges against him are legally insufficient to state offenses under these statutes, particularly in light of this court's recent decision in United States v. Aleynikov, 676 F.3d 71 (2d Cir. 2012) (reversing EEA and NSPA convictions on grounds of legal insufficiency). He further challenges the factual sufficiency of the evidence to support his NSPA conviction, complains of errors in the jury charge, and argues constructive amendment of the indictment and prejudicial variance in the proof. We reject these arguments and affirm the challenged conviction.
A. Agrawal's Employment with Société Générale
The crimes at issue derive from Agrawal's employment between early 2007 and November 2009 at SocGen's New York offices. Agrawal began his career as a "quantitative analyst" in SocGen's High Frequency Trading ("HFT") Group. The HFT Group engaged in "index arbitrage, " a process that seeks to profit by quickly exploiting fleeting differences in the prices of securities. Toward this end, the HFT Group used two computer trading systems, "ADP" and "DQS, " to determine when to purchase and sell securities. Each system was made up of highly complicated computer code developed over the course of some years at a cost of several million dollars to SocGen. Using the ADP and DQS systems, the HFT Group executed trades that generated more than $10 million in annual revenue for SocGen during 2007, 2008, and 2009.
As a quantitative analyst, Agrawal had no access to the code underlying the DQS or ADP systems. Rather, he developed "indicators" for others to use in refining the DQS system. Like other SocGen employees, however, Agrawal was required periodically to commit that neither during nor after his employment would he "disclose or furnish to any entity . . . any confidential or proprietary information of [SocGen], " and that, upon termination, he would return all documents, papers, files, or other materials in his possession connected to SocGen. GX 3.
In April 2009, Agrawal was promoted to "trader" for DQS, a position that put him in charge of that system's day-to-day operations. In this capacity, Agrawal spent several hours each week working with two SocGen computer programmers: Dominic Thuillier—who had written the underlying computer code for DQS—and Richad Idris. On June 12, 2009, Idris, following instructions from Agrawal's supervisor, copied the DQS code into an electronic folder from which Agrawal could retrieve the data as necessary. In the process, Idris mistakenly also copied the code for three other systems, including ADP, into the folder, even though Agrawal was not authorized to have access to this additional code.
B. Agrawal Steals SocGen's HFT Code and Offers To Duplicate Its Trading Systems for a Competitor
Unbeknownst to SocGen, Agrawal was then actively pursuing outside job opportunities. Toward that end, on June 8, 2009, he met with representatives of a New York–based hedge fund, Tower Research Capital ("Tower"). Agrawal told Tower that he was running one of SocGen's two index arbitrage strategies, had a "complete understanding" of that strategy, and could help build a "very similar" system for Tower. Tr. 79.
On Saturday, June 13—five days after his meeting with Tower and the day after he acquired access to SocGen's DQS code—Agrawal came into SocGen's New York office, printed out more than a thousand pages of the DQS code,  put the printed pages into a backpack, and physically transported the papers to his apartment in New Jersey. Three days later, on June 16, Agrawal again met with Tower partners to discuss replicating SocGen's HFT strategies for Tower. On July 10, Tower proposed to hire Agrawal for this purpose, offering him salary and bonuses exceeding $500, 000, plus 20% of profits generated by the anticipated DQS clone and 10% of profits from any ADP clone. Agrawal informally accepted Tower's offer in August 2009, but delayed disclosing this fact to SocGen for some months in order both to gain more experience with its HFT systems and to collect an anticipated bonus in October. Meanwhile, during August and September 2009, Agrawal copied and printed hundreds more pages of SocGen's HFT code—these pertaining primarily to the ADP code to which he had mistakenly been given access—and brought them to his home.
During these months, Agrawal also continued to meet with Tower partners, discussing the HFT systems he expected to develop for them and providing assurances that he could find out whatever information he needed about SocGen's systems to fill any gaps in his knowledge. At least one of those meetings was recorded by a Tower representative who was present.
Agrawal formally resigned from SocGen on November 17, 2009. In the week before he gave notice, Agrawal deleted from SocGen's computer system the Word documents into which he had pasted DQS and ADP code, as well as the ADP code files that Idris had mistakenly copied for him. Agrawal's resignation triggered a leave period of several months, during which he was paid by SocGen but did little work for it. Although Agrawal was prohibited from working for any SocGen competitor while on leave, he continued to meet with Tower personnel, including the computer programmers who were to write the code that would replicate SocGen's two HFT systems. Agrawal provided Tower personnel with detailed handwritten descriptions of the HFT system he wanted them to build, including mathematical information derived from SocGen's code that he identified as "what is done in DQS." Tr. 621.
C. Agrawal's Arrest and the Seizure of the Stolen Code
On April 19, 2010, the day Agrawal was to begin work at Tower, FBI agents arrested him at his home in New Jersey. Searches of his apartment resulted in the seizure of thousands of pages of carefully indexed and filed computer code pertaining to SocGen's two HFT systems. Agrawal admitted to an arresting agent that he had printed out the code and taken it home without disclosing that fact to his SocGen supervisors or receiving authorization to do so.
D. Agrawal's Prosecution and Conviction
On May 13, 2010, a grand jury sitting in the Southern District of New York charged Agrawal in a two-count indictment with violations of the EEA and the NSPA. After detailing pertinent facts in 18 numbered paragraphs, the indictment charged the two crimes both generally and specifically. With respect to the EEA, the indictment alleged as follows:
From at least on or about June 12, 2009, up through and including in or about April 2010, in the Southern District of New York and elsewhere, SAMARTH 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 18, 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 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 the Financial Institution proprietary computer code for the Financial Institution's high frequency trading business, with the intent to use that code for the economic benefit of himself and others.
Indictment ¶ 19. With respect to the NSPA, the indictment alleged as follows:
From at least on or about June 12, 2009, up through and including in or about April 2010, in the Southern District of New York and elsewhere, SAMARTH 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 the Financial Institution proprietary computer code for the Financial Institution's high frequency trading business, the value of which exceeded $5, 000, and brought that stolen code to his home in Jersey City, New Jersey.
Indictment ¶ 21.
At trial, Agrawal testified in his own defense. Judge Rakoff would subsequently characterize this testimony as effectively "admitt[ing] under oath all of the elements of the charges." Tr. 1211. Notably, Agrawal admitted that he had printed out SocGen's DQS and ADP code and had taken the printed paper copies to his New Jersey home. He acknowledged that such information was proprietary to SocGen and that, nevertheless, he had shared some of it with Tower in order to facilitate his getting a job with that entity. What he denied was that, at the exact time he transported each stack of copied code from New York to New Jersey, his intent was to steal or convert it. He maintained that at that time, he intended to use the code for SocGen's benefit by following through on a supervisor's request that he work from home on a project to combine elements of the DQS and ADP systems. Only later, in Agrawal's telling, did he decide to convert the code for his own benefit and Tower's.
Even before Agrawal gave this testimony, Judge Rakoff had cautioned that there was no basis in either the indictment or the law for requiring the government to prove that Agrawal possessed culpable intent at the precise time he printed and removed the HFT code from SocGen's New York offices. Insofar as Agrawal purported to locate that requirement in the indictment's "to wit" clauses, Judge Rakoff observed that those clauses could not be read in isolation or divorced from the preceding 18 paragraphs of the indictment, which indicated that the charged conduct spanned the period from June 12, 2009, through April 2010. As to the law, Judge Rakoff concluded that the EEA's intent element could be satisfied by proof that Agrawal possessed the requisite intent to convert when he "removed the code or at any point thereafter when he was still in unauthorized possession of the computer code, " and so charged the jury. Tr. 1006 (emphasis added). In so instructing the jury, Judge Rakoff explained that "without authorization" meant 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 or the benefit of another, at that point the removal becomes unauthorized." Id. at 1314. Agrawal did not challenge this interpretation of the EEA, but maintained that to charge it in light of the "to wit" clause effected a constructive amendment of the indictment.
Judge Rakoff had also proposed to charge the jury that to convict Agrawal of the EEA count, the government had 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." Appellee's Addendum 13. The government remarked that it did not "know exactly what the defense is going to argue on this particular point, if anything" and, therefore, requested that the court charge this element by reference to both statutory options, i.e., that the computer code was "related to" or "included in" a product produced for or placed in interstate or foreign commerce. Tr. 885. The court agreed to do so, but observed that it did not foresee this jurisdictional element being "a matter that is going to be materially disputed in any event." Id. at 885–86. The defense never contended otherwise.
Nor did the defense object to Judge Rakoff's further instruction as to how the government could satisfy this EEA element: "[I]t 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." Id. at 1315. Indeed, Agrawal never suggested to either the district court or the jury that the government had failed to plead or prove that SocGen's HFT computer code was related to or included in a product produced for or placed in interstate commerce. Rather, when, at the close of all the evidence, Agrawal moved to dismiss the indictment pursuant to Fed. R. Crim. P. 29, he argued only that the two counts "as explicated by the Court's charge and by the evidence presented by the government in this case constitute[d] a prejudicial variance and a constructive amendment of the charges of the grand jury indictment" as reflected in the "to wit" clauses. Id. at 1214. The court denied the motion, and the jury found Agrawal guilty on both the EEA and NSPA crimes charged.
Thereafter, Judge Rakoff calculated Agrawal's Sentencing Guidelines to recommend a prison sentence in the range of 63 to 78 months. Instead, on February 28, 2011, the court exercised its discretion to impose a non-Guidelines sentence of concurrent 36-month prison terms on the two counts of conviction. This timely appeal followed.
A. Legal Sufficiency of the Charges
1. Standard of Review
Agrawal challenges the legal sufficiency of both counts of the indictment. As to Count One, he argues that, insofar as the trade secret at issue, SocGen's computer code, was "included in" SocGen's HFT systems, those internal, confidential systems cannot qualify as "product[s] . . . produced for or placed in interstate or foreign commerce" as required by the EEA. 18 U.S.C. § 1832(a)(2) (emphasis added). As to Count Two, Agrawal asserts that SocGen's computer code is intangible property and, as such, not "goods, wares, or merchandise" as required by the NSPA. Id. § 2314. Neither argument was ever raised below.
We generally review a challenge to the legal sufficiency of an indictment de novo. See United States v. Shellef, 507 F.3d 82, 104 (2d Cir. 2007). Where, as here, however, a defendant failed to raise a sufficiency objection in the district court and presents it for the first time on appeal, we review for plain error. See United States v. Cotton, 535 U.S. 625, 631 (2002) (applying plain-error review to defective indictment claim); United States v. Nkansah, 699 F.3d 743, 752 (2d Cir. 2012); United States v. Doe, 297 F.3d 76, 81 (2d Cir. 2002). Under that standard,
an appellate court may, in its discretion, correct an error not raised at trial only where the appellant demonstrates 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 affect[s] the fairness, integrity or public reputation of judicial proceedings.
United States v. Marcus, 130 S.Ct. 2159, 2164 (2010) (internal quotation marks omitted).
In attempting to demonstrate plain error, Agrawal is entitled to the benefit of our recent decision in United States v. Aleynikov, 676 F.3d 71. See United States v. Garcia, 587 F.3d 509, 520 (2d Cir. 2009) (instructing that whether error is "plain" is determined by reference to law at time of appeal); see also Henderson v. United States, 133 S.Ct. 1121, 1126 (2013) (holding that court of appeals is bound by law as it exists at time of appeal); Johnson v. United States, 520 U.S. 461, 468 (1997) ("[I]t is enough that an error be 'plain' at the time of appellate consideration."). In Aleynikov, another dishonest employee, this one employed by Goldman Sachs, also stole proprietary trading code, in that case by uploading more than 500, 000 lines of code to a third-party computer server in Germany, downloading the code from that server to his home computer, and then electronically copying some of the files to other computer devices that he owned. See 676 F.3d at 74. This court reversed defendant's EEA conviction, holding that to the extent such code was "included in" the employer's confidential trading system, that system was not "a product that is produced for or placed in interstate or foreign commerce, " as required by the EEA, 18 U.S.C. § 1832(a)(2), because the employer never intended to sell or license the system but, rather, went to great lengths to maintain its secrecy, see United States v. Aleynikov, 676 F.3d at 82. The court further reversed defendant's NSPA conviction, holding that the code, stolen entirely in electronic form, was not tangible property, as necessary to qualify as "goods, wares, [or] merchandise" under 18 U.S.C. § 2314. See id. at 76–79.
While Aleynikov's construction of the EEA and NSPA controls on the matters it decides, Agrawal's case is distinguishable from Aleynikov in important respects that preclude him from demonstrating plain error in the legal sufficiency of his indictment. We here briefly summarize what we explain further in this opinion.
As to the EEA charge, in this case, neither the indictment nor the prosecution's arguments or the court's charge identified SocGen's confidential HFT systems as the "product" relied on to satisfy the crime's jurisdictional element. Rather, the record indicates that the relevant product was the publicly traded securities bought and sold by SocGen using its HFT systems. Because such securities satisfy the EEA's jurisdictional element without raising the concerns identified in Aleynikov, Agrawal cannot demonstrate that any pleading insufficiency with respect to SocGen's HFT systems affected his substantial rights, much less the fairness, integrity, or public reputation of judicial proceedings.
Insofar as Agrawal invokes Yates v. United States, 354 U.S. 298 (1957), to urge otherwise, faulting the indictment and charge for failing to specify that only securities, and not SocGen's HFT systems, could satisfy the EEA's product requirement, we similarly review only for plain error because no such objection was ever raised in the district court. Agrawal cannot demonstrate Yates error because neither the prosecution nor the court ever presented SocGen's HFT systems to the jury as "products" satisfying the EEA's jurisdictional element. In any event, any such error would not be "plain, " because the only possible basis for treating confidential trading systems as products produced for or placed in interstate commerce was that such systems are used to buy and sell securities traded in interstate commerce. In short, no jury could find SocGen's HFT systems to qualify as EEA products (impermissibly, after Aleynikov), without first finding that the securities traded using those systems were such products. In these circumstances, any Yates error in failing to distinguish between the two possible products could not have affected either Agrawal's substantial rights or the fairness, integrity, or public reputation of judicial proceedings.
As to the NSPA charge, Agrawal's legal-sufficiency challenge fails at the first step of plain-error analysis. Because Agrawal—unlike Aleynikov—stole the computer code in a tangible rather than intangible form, i.e., printed onto thousands of sheets of paper, he cannot demonstrate any error, let alone plain error, in charging him with the theft of "goods, wares, [or] merchandise." 18 U.S.C. § 2314.
2. Count One (EEA)
a. The Alleged Securities Publicly Traded Using SocGen's Confidential Computer Code Were Legally Sufficient To Satisfy the Product and Nexus Requirements of the EEA's Jurisdictional Element
The Electronic Espionage Act, as in effect at the time of Agrawal's indictment and conviction, stated in relevant part as follows:
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—
(1) steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains such information;
(2)without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, ...