Security & Fraud

Ex-Microsoft Engineer Guilty Of Pilfering $10M In eCurrency

A former Microsoft engineer was found guilty of 18 federal felonies after he stole $10 million worth of digital currency from his ex-employer and used the money to finance a $1.6 million waterfront house, $160,000 Tesla, and other lavish items, the U.S. Department of Justice (DOJ) said on Tuesday (Feb. 25).

Software developer and Ukrainian native Volodymyr Kvashuk, 25, from Renton, Washington, worked for Microsoft from 2016 to 2018, and was tasked with testing Microsoft’s online retail sales platform. He took advantage of that access to steal currency stored value (CSV) such as digital gift cards that he then resold on the internet.   

Following a five-day trial in the Western District of Washington, Kvashuk was convicted of five counts of wire fraud, six counts of money laundering, two counts of aggravated identity theft, two counts of filing false tax returns, and one count each of mail fraud, access device fraud, and access to a protected computer in furtherance of fraud. Sentencing takes place on June 1, and he faces up to 20 years in prison.

Initially, Kvashuk pilfered smaller amounts totaling about $12,000 and used his own account access. As the thefts mounted, reaching millions of dollars, he used other employees’ test email accounts. He attempted to conceal the evidence in part by using a bitcoin “mixing” service.  

Over a seven month period of illegal activity, he transferred into his accounts roughly $2.8 million in bitcoin. On fake tax returns, he said the bitcoin was gifted to him from a relative.

He was accused of stealing digital currency such as gift cards that could be redeemed for Microsoft products, then reselling them on the Internet. He then used the proceeds to buy a $160,000 Tesla vehicle and a $1.6 million lakefront home.

Microsoft confronted Kvashuk and fired him in June 2018.

In closing arguments, Assistant U.S. Attorney Siddharth Velamoor said Kvashuk “hid behind his colleagues’ names…. dripping fraud and deceit every step of the way…. This is a simple case… any way you look at it this is a crime of greed.”

Kvashuk testified at trial that his intention was never to defraud Microsoft and he maintained he was working on a special project to benefit the company.

“In addition to stealing from Microsoft, Volodymyr Kvashuk also stole from the government by concealing his fraudulent income and filing false tax returns,” said IRS-CI Special Agent in Charge Ryan L. Korner. “Kvashuk’s grand scheme was thwarted by the hard-work of IRS-CI’s Cyber Crimes Unit.  Criminals who think they can avoid detection by using cryptocurrency and laundering through mixers are put on notice … you will be caught and you will be held accountable.”     

Corporate fraud comes in many colors, but for many businesses, the most unexpected threat is the one looming from within company walls. Among the most common types of internal employee fraud is expense fraud, but payroll fraud is another common occurrence.

——————————

New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

TRENDING RIGHT NOW