United States v. Agrawal

726 F.3d 235

UNITED STATES of America, Appellee,

v.Samarth AGRAWAL, Defendant–Appellant.

Docket No. 11–1074–cr.

United States Court of Appeals, Second Circuit.

Argued: June 21, 2012.

Decided: Aug. 1, 2013.

Marshall A. Mintz, Mintz & Oppenheim LLP, New York, NY, 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, NY, for Appellee.

Before: POOLER, RAGGI, and LYNCH, Circuit Judges.

Judge POOLER concurs in part and dissents in part in a separate opinion.

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”), see18 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.

I. BackgroundA. 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. 79.¹

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,² 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. 621.³

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...