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December 7, 2007 at 1:28 PM

Former Microsoftie indicted for million-dollar fraud scheme

Carolyn Gudmundson, a 44-year-old Kirkland woman and former MSN program manager, is scheduled to appear in U.S. District Court this afternoon to face charges of wire fraud and mail fraud for a scheme that netted her more than $1 million.

The U.S. Attorney’s Office in Seattle alleges that Gudmundson “fraudulently billed her employer and related entities for reimbursement for costs she had purportedly incurred in registering and maintaining Internet domain names for Microsoft and Expedia.”

She is charged with eleven counts of wire fraud and seven counts of mail fraud, crimes punishable by up to 20 years in prison and a $250,000 fine.

Update: Gudmundson intends to plead not guilty at a formal arraignment scheduled for Thursday, according to her attorney.

Here’s Microsoft’s statement: “We can confirm that Microsoft worked closely with authorities on this investigation. We take employee theft seriously and have internal measures in place to help identify fraudulent activities.” End of update.

According to a press release issued this afternoon, here’s how the deed was allegedly done:

Between 2000 and 2004, Gudmundson was responsible for registering, transferring, renewing, acquiring and retiring Internet domain names for Expedia and Microsoft. During the course of this part of her job, Gudmundson defrauded Microsoft in three ways.

First, Gudmundson was authorized to use her personal credit card to purchase, renew and acquire Microsoft’s domain names and then submit reimbursement requests to Microsoft. Gudmundson altered the credit card receipts she submitted so that they showed a much higher price for the purchase, renewal and acquisition of domain names than she actually had paid, and then used these altered credit card receipts to support the false and fraudulent amounts claimed on her reimbursement requests to Microsoft.

Second, Gudmundson allegedly submitted invoices to Expedia for the registration of domain names that she had not paid for.

Third, Gudmundson used an outside company that assists in the negotiation for the purchase of domain names from private parties. Gudmundson told an employee of that company that a fictitious individual had purchased domain names in his name on Microsoft’s behalf and that she needed the employee to send a check to that individual to reimburse him for his costs. Gudmundson then directed the employee to send the checks to her, where she allegedly deposited them into a bank account that she controlled.

I’ll report any response Gudmundson or her yet-to-be-identified counsel have to the charges. A Microsoft spokesman is looking into the matter and promised to respond with a comment shortly.

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