A former Microsoft software engineer was sentenced to 9 years in prison for defrauding the company for over $10 million.
The U.S. Internal Revenue Service (IRS) said this was the first bitcoin case involving tax fraud.
According to a U.S. Justice statement, Ukrainian citizen Volodymyr Kvashuk worked for Microsoft from August 2016 to June 2018, when he was fired from the company. Almost two years later, he was sentenced to 9 years in prison for 18 federal crimes.
Given his experience as a software developer, Kvashuk tried to cover his tracks digitally using a Crypto Genius mixing service in order to hide the initial source of funds that were being deposited into his personal bank account.
Kvashuk was convicted in February 2020 on five counts of electronic fraud, six counts of money laundering, two counts of identity theft, two counts of filing false tax returns, one count of mail fraud and computer fraud for fraud purposes.
During his time at Microsoft he misused his access privileges to the company’s online sales platform. Kvashuk took advantage of his position to steal digital gift vouchers and sell on the internet.
Living a life of luxury by stealing
The software engineer started out shy and used his own account access to steal a total of about $12,000. Kvashuk’s greed may well have been his downfall, as he started using other employees‘ email accounts to continue his scheme.
With the money he got from selling the stolen gift vouchers he bought a lake house that cost $1.6 million as well as a luxurious $ 160,000 Tesla.
„Bitcoin was a gift from a relative“ said the defendant
The investigation revealed that during the seven months of his illegal activity, Kvashuk transferred more than $2.8 million in Bitcoin to his bank accounts. He even filled out false income tax returns in which he said the Bitcoins he received were a gift from a relative.
During the trial, Kvashuk said he didn’t want to defraud Microsoft and that he was working on a special project to benefit the company. The prosecutors also stated that the behavior of the former employee put at risk the career of other Microsoft employees.
„The scheme involved lies and deceit at every stage. He put his colleagues in the line of fire using their test accounts to steal gift cards. Instead of taking responsibility, he witnessed and told a series of outrageous lies. There is no sign that Kvashuk feels any remorse or regret for his crimes,“ a note from the prosecutors tells the court.
Kvashuk was found guilty after a jury deliberated for about 5 hours after a five-day trial. He was also sentenced to pay over $8.3 million in restitution for his crimes and may be deported to Ukraine after serving his prison sentence.
„You can’t steal money over the Internet and think that Bitcoin will hide his criminal behavior“.
The U.S. Revenue Special Agent said the trial will be a learning experience for perpetrators of cyber crime.
„The Volodymyr Kvashuk trial marked a major victory for the IRS and the federal cybercrime team. Kvashuk’s criminal acts of stealing from Microsoft, and subsequent filing of false tax returns, is the first case of Bitcoin in the country that has a fiscal component. Put simply, today’s sentence proves that you can’t steal money over the Internet and think that Bitcoin will hide its criminal behavior,“ said Korner.