A computer geek who stole high-speed trading software from the multibillion dollar Citadel hedge fund in Chicago used the pilfered technology to play the stock market — but Yihao “Ben” Pu’s scheme backfired and he lost $40,000 on his investments.
Then Citadel and an unnamed company where Pu also worked learned he stole their software, and the 28-year-old engineer was charged with theft of trade secrets and sentenced to 36 months in federal prison. He also was ordered to pay almost $760,000 in restitution to Citadel.
But earlier this week, the federal appeals court in Chicago returned the case to a lower court for resentencing after finding the judge erred when he found Pu intended to cause the companies a $12 million loss — the cost of developing the software. The loss calculation improperly boosted Pu’s potential sentence, the appeals court found.
Because of the loss calculation, Pu’s minimum prison term was 87 months under federal sentencing guidelines. But the appeals court ruled the government never proved that Pu planned to cause the companies a loss. And the government never proved that Pu intended to sell the software.
In the end, U.S. District Judge Charles Norgle sentenced the Cornell University graduate to a sentence far below the minimum guideline because of his youth and his lack of a criminal record. But Pu’s sentence could have been even lower, wrote federal appeals judge Ann Claire Williams in an opinion issued Wednesday.
“Although the district court departed downward, it may have sentenced Pu differently had it been departing from a different guideline range,” she said.
The appeals court also ruled the government must give a more thorough accounting of the money Citadel spent on investigating Pu’s theft before requiring him to pay restitution.
Pu, who was sentenced in January 2015 after pleading guilty, was initially suspected of planning to use the stolen technology to start his own hedge fund in China. But Norgle found “there is no evidence before the court to suggest that there was some grander scheme.”
Pu tried to cover up his theft by having an associate dump computer equipment in a sanitary canal near Wilmette Harbor. Divers later recovered computer hard drives containing Citadel’s software, authorities said.
Sahil Uppal, a co-worker of Pu at Citadel, was also involved in the theft scheme and was sentenced to probation. He was not involved in Pu’s appeal.