Thursday, October 29, 2020

Former Microsoft engineer convicted in cryptocurrency fraud scheme


A former employee at Microsoft has been found guilty of 18 federal felonies in connection with a complex scheme to embezzle $10 million using cryptocurrency.

The man — a 25-year old Ukrainian national, Volodymyr Kvashuk — worked as a full-time software engineer at the firm from August 2016, before being fired in June 2018.

Kvashuk was convicted in the United States District Court in Seattle, the Department of Justice revealed on Feb. 25.

“A house of lies”

The multi-count conviction reveals the complexity of Kvashuk’s scheme, in which he hid behind accounts tied to his fellow employees and resorted to extensive fraud and cryptocurrency mixing services to cover his tracks.

- Advertisement -

The 18 felonies thus span 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.

In his role at Microsoft, Kvashuk was involved in testing the corporation’s online retail sales platform. He exploited his testing access to steal “currency stored value,” such as crypto gift cards, which he then resold at a profit on the web.

Beginning with small amounts of $12,000 in value using his own account access, Kvashuk turned to using test email accounts linked to other employees as the magnitude of his thefts escalated to millions of dollars.

To further obscure his connection to the scheme, Kvashuk used a Bitcoin mixing service to muddy the digital source of the funds that ultimately were cashed into his bank account.

- Advertisement -

Over a seventh month period, roughly $2.8 million in Bitcoin was transferred into Kvashuk’s account. He also used the ill-gotten proceeds to buy luxury goods, including a $160,000 Tesla car and a $1.7 million lakefront home.

Kvashuk falsified tax return forms, falsely claiming he had received the Bitcoin as a gift from family. Assistant U.S. Attorney Siddharth Velamoor told the court Kvashuk’s “crime of greed” dripped “fraud and deceit every step of the way.”

During the five-day trial, Kvashuk claimed he had been working on a special project for Microsoft’s benefit, rather than intending to defraud the firm. Velamoor’s colleague, assistant attorney Michael Dion, characterized the testimony as “a house of lies on top of a previous house of lies.”

For his crimes, Kvashuk faces up to 20 years in prison.

The crimes were reportedly thwarted by the U.S. tax agency IRS-CI Cyber Crimes Unit. Pointing to Kvashuk’s theft from both Microsoft and the federal government, IRS-CI special agent in charge Ryan L. Korner said:

[su_quote]“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.” [/su_quote]

Strengthening investigative powers

Earlier this month, U.S. President Donal Trump’s proposed budget laid out a tough stance against crypto-associated financial crimes.

It included a proposal to reconsolidate the Secret Service with the Department of the Treasury to improve the efficiency of cyber and financial crime investigations.

The administration also revealed it intends to continue to invest in tools that can help the government to combat new threats, such as the use of crypto in money laundering and terrorist financing.


Nigerian court declines to issue international arrest warrant for fugitive ex-Petroleum Minister in corruption case

The Abuja Division of the Federal High Court, on Wednesday, refused an application by the Economic and Financial Crimes Commission, EFCC, for an arrest...

South Korea’s former Vice Justice Minister sentenced to jail for bribery and sexual favors

Former Vice Justice Minister Kim Hak-eui, the figure at the center of one of Korea’s biggest political sex scandals, was placed under pretrial detention...

Beam Suntory Inc. fined $19.6 million in foreign bribery case

Beam Suntory Inc. (Beam), a Chicago-based company that produces and sells distilled beverages, has agreed to pay a criminal monetary penalty of $19,572,885 to...

Julius Baer to deny two former CEOs their bonuses over money laundering scandal

Julius Baer will withhold millions of francs in bonuses from its former chief executives Boris Collardi and Bernhard Hodler, as a result of a...

Goldman Sachs executives to cover part payments of $3 billion fines in 1MDB scandal

Nine current or former Goldman Sachs executives, including CEO David Solomon, will have to pay back hundreds of millions of dollars in compensation over...

Subscribe For More

Get our daily notification on the latest financial crimes news around the World


Latest News

This Week

Operators of fake theology school accused of stealing $12 million in student aid

Six people from three states are charged with defrauding $12 million from federal student aid programs by allegedly enrolling students into a theology school...

Namibia probes oil firm Acer petroleum over bribes paid to government officials

THE mines and energy ministry says it is investigating allegations that an oil company bribed some senior officials to fast-track licence applications. The senior officials...

UK regulators fine Goldman Sachs £97 million over 1MDB scandal

Goldman Sachs International has been fined £96.6m by UK regulators for risk management failures connected to the 1MDB scandal. The Financial Conduct Authority and Prudential...

Brother of ex-Pakistan PM Nawaz Sharif jailed for money laundering

Pakistan Muslim League-Nawaz (PML-N) chief and Opposition Leader in the National Assembly Shehbaz Sharif was sent to jail on Tuesday in a money laundering...

Adblock Detected!

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by whitelisting our website.

Enable Notifications    Ok No thanks