Tuesday, November 10, 2020

Former Microsoft tester sent down for 9 years after $10m gift card fraud | The Register

An ex-Microsoft staffer has been sentenced to nine years in prison after defrauding the Windows giant of more than $10m.

The defendant, Volodymyr Kvashuk, had been found guilty of all 18 offences with which he was charged, including wire fraud, money laundering and "access to a protected computer in furtherance of fraud" earlier this year and was sentenced by US Washington district judge James L Robart yesterday.

Sentencing had been expected on 1 June, and Kvashuk was facing up to 20 years.

Kvashuk had been a member of a testing team for Microsoft's online store between August 2016 and June 2018, employed variously by a third party and Microsoft itself. The team was tasked with ensuring that the purchasing process was a smooth one and able to set up accounts for the purposes of testing.

Those accounts bypassed Microsoft's fraud checks because they were just for testing. The delivery of actual physical goods was blocked.

However, the complaint [PDF] noted that "Microsoft did not anticipate that testers would make test purchases of digital currency... and thus no safeguards were put in place."

Kvashuk made use of his role of tester, according to the complaint, to "fraudulently obtain over $10,000,000 in CSV [digital currency such as digital gift cards]". The scam saw Kvashuk make use of reseller websites to offload "at least some of the CSV to third parties", who could then redeem the codes and purchase items from Microsoft.

The thefts began small; Kvashuk initially stole smaller amounts totalling approximately $12k using his own account access. Things soon escalated, and the engineer made use of test accounts associated with other employees and a bitcoin "mixing" service to conceal the source of the funds flowing into his bank account.

Approximately $2.8m of bitcoin were transferred, which Kvashuk claimed "had been a gift from a relative," according to the Department of Justice.

As well as putting other Microsoft employees under suspicion, Kvashuk's scheme allowed him to live, albeit briefly, a high life. He drove a $160,000 car and lived in a $1.6m lakeside home.

At his trial, Kvashuk insisted that defrauding Microsoft had not been his intent. Indeed, he was working on a special project "to benefit the company" according to the US Department of Justice.

It took a jury five hours after the five-day trial to return the guilty verdicts.

As well as the nine-year sentence and $8,344,586.31 restitution [PDF] he was sentenced to pay, there is every chance that the Ukrainian citizen will be deported at the end of his jail term. ®

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