Ex-Microsoft engineer gets 9-year prison sentence for fraud scheme

He'd racked up 18 federal felonies leading up to the sentencing.

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2 min read

A former Microsoft engineer is accused of defrauding the company.

Angela Lang/CNET

A former Microsoft engineer was sentenced to nine years in prison by a federal court in Seattle on Monday for defrauding the tech giant of millions of dollars.  Volodymyr Kvashuk, 26, racked up 18 federal felonies related to his scheme to defraud Microsoft of more than $10 million, according to the US Department of Justice. He was also ordered to pay more than $8 million in restitution. 

Kvashuk, a Ukrainian citizen living in Renton, Washington, began as a contractor and then worked as an employee at Microsoft from August 2016 until June 2018, when he was fired. In February, he was "convicted by a jury 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," according to the Justice Department. 

"Stealing from your employer is bad enough, but stealing and making it appear that your colleagues are to blame widens the damage beyond dollars and cents," US Attorney Brian T. Moran said in a statement. "This case required sophisticated, technological skills to investigate and prosecute."

Kvashuk was tasked with testing Microsoft's online retail sales platform and used that access to steal currency stored value, like digital gift cards. He then sold that value online, ultimately using his earnings to buy a $1.6 million lakefront home and a $160,000 Tesla. 

He started off stealing smaller amounts worth a total of around $12,000 using his own account, the Justice Department said. Then, as the thefts built up, Kvashuk began using test email accounts linked to fellow employees. He worked to cover his tracks by using a bitcoin "mixing" service that would hide the source of the funds ending up in his bank account. Over seven months, around $2.8 million in bitcoin was transferred to his bank and investment accounts. Kvashuk filed fake tax return forms and said the bitcoin was a gift. 

"Kvashuk's criminal acts of stealing from Microsoft, and subsequent filing false tax returns, is the nation's first Bitcoin case that has a tax component to it," Ryan L. Korner, IRS Criminal Investigation special agent in charge, said in a statement. "Today's sentencing proves you cannot steal money via the Internet and think that Bitcoin is going to hide your criminal behaviors."