| NEW YORK
NEW YORK Dec 4 A Chinese computer programmer
was spared prison time and sentenced to six months of house
arrest on Tuesday after he admitted to stealing millions of
dollars of software code from the Federal Reserve Bank of New
Bo Zhang, 33, had pleaded guilty in May, after telling
investigators that he had downloaded the code to an external
hard drive and taken it home. He also pleaded guilty to a
separate count of immigration fraud.
Zhang's case had raised security concerns among
congressional investigators and others that the New York Fed
might be vulnerable to cyber attacks.
The government has said the code that Zhang downloaded,
designed for a system that helps keep track of its finances,
cost $9.5 million to develop.
"I just want to apologize to the government, the court, my
previous employers, my clients for causing this mess," Zhang,
dressed in a blue shirt and gray slacks, told U.S. District
Judge Paul Gardephe at a hearing in Manhattan federal court.
Zhang said he was "terribly sorry."
Zhang had been cooperating with the investigation, which
began after he told a colleague he had lost one drive holding
the code. Bank officials later alerted the FBI.
His sentence includes three years of supervised release,
including the home confinement. No fine was imposed. Zhang could
eventually face deportation as a result of his guilty plea.
The sentence was in line with what Zhang's probation
officers had recommended. Prosecutors had sought a 12- to
18-month prison term.
Jerika Richardson, a spokeswoman for U.S. Attorney Preet
Bharara in New York, declined to comment. New York Fed
spokeswoman Andrea Priest also declined to comment.
The source code was for the Government-wide Accounting and
Reporting Program, a system owned by the U.S. Department of the
Treasury a n d used to help manage billions of dollars of daily
Prosecutors said Zhang had been hired in May 2011 as a
contractor for an unnamed technology consulting company that the
Fed used to work on its computers.
They said he eventually copied part of the code onto a New
York Fed-owned portable drive, and later transferred it to an
office computer, a home computer and a personal laptop.
NO SECOND CHANCES
In seeking leniency, Zhang's lawyer, Jeffrey Lichtman,
pointed to his client's lack of a prior criminal history, his
having been raised by nannies for part of his childhood and
letters submitted to the court in support of a lighter sentence.
"Part of the problem here is his desperate, desperate
attempts to fit in, to belong," he said.
Federal prosecutor Niketh Velamoor countered that while
Zhang had had a difficult upbringing, he should be held
responsible for his illegal activity.
The judge, though, called a prison sentence "not
appropriate," while warning Zhang: "There will be no second
Gardephe called the matter a "very unusual case for many
reasons," including that the code "was developed at great cost,
but which the government still has the complete ability and
freedom to use."
All sides agreed that the actual loss linked to the theft
was $5,000 or less.
It remains unclear how Zhang came to be hired or what kind
of security clearance he had. Unlike federal agencies, the New
York Fed does not have to reveal how it hires outside
The case is USA v Zhang, U.S. District Court, Southern
District of New York, No. 12-cr-00390.