| As Quant Prosecuted for
Stealing Source Code of Headlands
Press Opposed Closure Now Daubert
Fight
by
Matthew Russell Lee, Patreon Book
Substack SDNY
COURTHOUSE,
Sept 3 – Back in January
2025 SDNY prosecutors
announced an Indictment
charging CHEUK FUNG RICHARD HO
with theft and attempted theft
of trade secrets. The
charges in the Indictment
arose from HO’s alleged scheme
to steal trade secrets from
his former employer, a global
quantitative trading firm.
That firm was Headlands
Technologies LLC. On September 12,
2025 Ho was before U.S.
District Court for the
Southern District of New York
Judge Jannette A. Vargas.
Inner City Press was there,
and live tweeted: Judge: Where are
we on discovery? AUSA: We've
seized the AWS files of Mr.
Ho's firm, 15 TB. Judge: Can you do
AI search? AUSA: We don't
currently have that
capability. But we think a
June 2026 trial is doable Ho's Skadden
lawyer: My client says he
wrote the source code. All we
have from the Government is 61
snippets Judge: A 3 week
trial is set is set to start
July 13, 2026. On November 7,
2025 the US Attorney's Office
filed to quash subpoenas Ho
filed, saying they do not meet
the Nixon standard. Jump cut to
August 2026, when the US
Attorney's Office proposed to
seal the courtroom not only
for portions of the trial, but
also for the Daubert expert
hearings. Inner City Press
immediately filed opposition,
now on CourtListener here. Note that previous attempts in SDNY to seal the courtroom have been opposed, and transparency safeguards imposed were only belated and partially complied with, see here. And here. This is an ongoing project, including in other Districts. On August 18 Ho's
lawyers also opposed sealing,
and first noted: "A member of
the Press has likewise
formally opposed the
Government's motion to close
the courtroom under the First
Amendment, see Docket No. 152"
- Inner City Press' opposition
to unsealing. Full 16
page memo by Ho's lawyers on
Patreon here. On August 21 a
non-party was directed to file
a declaration supporting
sealing - under seal: "ORDER
as to Cheuk Fung Richard Ho:
Pursuant to 18 U.S.C. §
1835(b), Nonparty-1 is
authorized to file under seal
a declaration in support of
the Government's motion to
close the courtroom for
portions of the upcoming
Daubert hearings and
trial. (Signed by Judge
Jeannette A. Vargas on
8/21/2026) ." On August 25
Judge Vargas denied Ho's
motion for a bill of
particulars, saying in part
that the indictment is
detailed enough. On August 31
Judge Vargas denied a request
to change the timing and
sequence of the Daubert
hearing. But will it, as the
US Attorney's Office has
requested, be sealed? An answer came on
September 1, just after Inner
City Press orally opposed
sealing of Judge Vargas'
courtroom in another case,
Cumulus v. Nielsen) -
"received an objection to the
contemplated court closure
from a member of the press.
ECF No. 152 ('Lee Opp’n' or
'Press Opposition'). [T]he
Court will authorize limited
closure of the courtroom
during the Daubert hearings
and trial, as set forth
further herein. ... The
breadth of the closure will be
as narrowly tailored as
reasonably possible under the
circumstances." And so on
September 2: All rise! Judge
Vargas: My order came out
yesterday, on closure. My
understanding is that closure
will be limited, it covers
this hearing [and the trial,
which Inner City Press also
intends to live tweet]. Please
refer obliquely to
confidential information AUSA: We
ask for permission at the
outset to seal these code
files. Ho's lawyer: No
objection. Judge: The
Government may proceed. AUSA:
Ms. Lena Lowenstine, what is
your education? Expert:
Mathematics, cryptologic, U of
Cincinnati. Expert: I
worked at the NSA for over
four years, in reverse
engineering software... Then
at Washington University in
St. Louis, I wrote code that
automated my own job so I
left, to government contractor
Booz Allen Expert: At
Booz Allen I reviews satellite
imagery. Then I was a
contractor for the FBI on
cyber investigations.
Now I work directly for the
FBI. I am a certified ethical
hacker. I have spend 30,000
hours writing computer code. AUSA: What
about this case? DOJ expert: I
was shown Headlands files by
an AUSA. The files were chosen
by Headlands. I compared them
to One R Squared's files.
AUSA: How did you compare
them? DOJ expert: Keywords,
the names used, specific
elements AUSA: What
was the level of similarity
between the Headlands code and
the One R Squared code? DOJ
expert: It's like two
textbooks with the same
chapters, same sections and
the sentences are saying the
same thing, it's one to one. AUSA: Our private
screens don't seem to work.
Can we ask the people in the
gallery to sit in the jury box
so they can't see? [Press
question: how would this work
in the trial, which they also
want to partially seal and use
privacy screen - but there
will be jurors DOJ expert:
Both softwares, representing
one third, used 15 threes
before stopping. The choices
the developer made were
exactly the same. 32 times.
AUSA: What do you conclude?
DOJ expert: That the One R
Squared code was derived from
Headlands, not independent Cross Ho's
lawyer: Do you have any
education about trading in the
financial markets? DOJ expert
Lowenstine: No. Ho's lawyer:
But you did crypto logic math.
What is that - figuring out
somebody's password?
Lowenstein: Not really. It's
about a key Ho's lawyer
David Meister: At the NSA,
your work had nothing to do
with HFT? DOJ expert
Lowenstein: I don't know what
that is. [Inner City
Press: It is high frequency
trading. Some questions about
witness prep here : ) On September 3,
Day 2 and problems for the
defense expert and his NDAs:
[Programming
note:
there was a strange one-lawyer a
side sidebar in the courtroom -
afterward Inner City Press rode the
elevator down with Government team
member who US agreed would not
remain in the courtroom to hear Ho's
expert] OK -
now US cross of Ho's expert Prof
Mark Hendricks - Judge:
The defense is going to have to go
file by file or his testimony will
not be allowed. I told you had Rule
16 concerns about Mr... Doctor...
Professor Hendricks, we'll go
through all variants. On the
Government's witness, my concerns
are qualifications Judge
Vargas:
The key to this case is whether this
code is unique or whether it is used
by 20 or so other firms. Perhaps
what we need to do - the US is in
the middle of the cross examination Judge:
What codes is he saying he saw in a
textbook? Which textbook? He can't
just say it at trial - that is
grossly unfair to the Government.
This hearing was supposed to happen
in July. The Government asked for it
at the end of August. Now here we
are Judge:
We're
not even two weeks out from trial.
Clearly you are not prepared today.
How soon can you provide a
supplemental Rule 16? AUSA
Matthew Weinberg: Where have you
seen line 39, which firm? AUSA:
You can't name the firms because at
the University of Chicago you sign
non-disclosure agreements? AUSA:
So on your consulting job did you
see the code? Judge
Vargas:
I'm going to give the defense an
opportunity to supplement. There has
to be some level of detail some file
by file. I was supposed to be gone
at 1 pm, you can send a letter. I'll
be ruling on the Daubert motions on
Tuesday, and more Judge:
I am wondering if Ms. Lowenstine
should be allowed to use terms like
plagiarism and deliberate masking,
under Rules 704(b) and 403. More on X,
Threads, Bluesky. Watch this
site. The case is USA v. Ho, 1:25-cr-3 (Vargas)
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innercitypress.com |
Friday, September 4, 2026
As Quant Prosecuted for Stealing Source Code of Headlands Press Opposed Closure Now Daubert Fight
