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Case 2:19-cr-00143-JLR Document 171 Filed 11/02/20 Page 1 of 9

1 Hon. James L. Robart


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3
4
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7 UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF WASHINGTON
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AT SEATTLE
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UNITED STATES OF AMERICA, NO. CR19-143JLR
11
Plaintiff,
12 GOVERNMENT’S SENTENCING
MEMORANDUM
13
v.
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VOLODYMYR KVASHUK,
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Defendant.
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The United States of America, by and through Brian T. Moran, United States
18
Attorney for the Western District of Washington, and Michael Dion and Siddharth
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Velamoor, Assistant United States Attorneys, files this sentencing memorandum.
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Defendant Volodymyr Kvashuk was convicted after trial of wire fraud, aggravated
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identity theft, and other offenses. The United States recommends a total sentence of 120
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months.
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I. FACTUAL BACKGROUND
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The following paragraphs summarize the evidence at trial.
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Kvashuk’s Role at Microsoft
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Kvashuk is a former software engineer at Microsoft Corporation (“Microsoft”).
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UNITED STATES ATTORNEY
KVASHUK/SENTENCING MEMORANDUM - 1 700 S TEWART S TREET, S UITE 5220
S EATTLE, W ASHINGTON 98101
CR19-143JLR (206) 553-7970
Case 2:19-cr-00143-JLR Document 171 Filed 11/02/20 Page 2 of 9

1 Kvashuk worked as an outside contractor to Microsoft between August 2016 and October
2 2017. He returned as a full-time employee in December 2017 and remained at the
3 company until his termination in June 2018. Kvashuk’s final annual salary at Microsoft
4 was approximately $116,000.
5 Between August 2016 and June 2018, Kvashuk was a member of Microsoft’s
6 Universal Store Team (“UST”). UST supported the Microsoft online store, an internet-
7 accessible Microsoft digital marketplace on which people can buy physical items (e.g.,
8 laptops, video-game consoles, tablets, and phones) and digital products (e.g., software).
9 UST wrote the programming code that operates the online store, and tested that code to
10 ensure that it worked as intended.
11 To simulate the customer experience on the Microsoft online store, UST members
12 took some of the steps that an ordinary customer would take. For instance, UST
13 members set up accounts on the Microsoft online store, browsed the online store’s
14 offerings, and added items to digital shopping carts. UST members registered these “test
15 accounts” using digital credentials—namely, email addresses, usernames, and
16 passwords—which were created specifically for the purpose of testing. Microsoft also
17 gave UST members artificial payment devices (i.e., phony credit cards), named “Test in
18 Production” (“TIP”) cards, that could be used to “make payment” for products purchased
19 using test accounts. The testimony at trial showed that Kvashuk had access to the
20 usernames and passwords for other employees’ test accounts.
21 Kvashuk’s Theft From Microsoft
22 Kvashuk’s criminal scheme involved the use of his and other UST members’ test
23 accounts to purchase digital gift cards from the Microsoft online store. While Microsoft
24 blocked the delivery of physical goods (e.g., laptops) purchased by test accounts, no such
25 safeguards prevented the delivery of digital gift cards purchased by test accounts. Those
26 digital gift cards, which Microsoft refers to as “Currency Stored Value” or “CSV,” are a
27 form of digital currency that anybody can use in order to purchase items on the Microsoft
28
UNITED STATES ATTORNEY
KVASHUK/SENTENCING MEMORANDUM - 2 700 S TEWART S TREET, S UITE 5220
S EATTLE, W ASHINGTON 98101
CR19-143JLR (206) 553-7970
Case 2:19-cr-00143-JLR Document 171 Filed 11/02/20 Page 3 of 9

1 online store. To redeem the value of a digital gift card, a purchaser must use a 25-digit
2 “5x5” code that Microsoft generates at the time the digital gift card is purchased.
3 Kvashuk used test accounts to obtain over $10 million in CSV between 2017 and
4 2018. Two of these test accounts were assigned to other Microsoft employees, namely
5 “Z.J.” and “A.C.” Kvashuk used a small amount of that CSV to purchase physical
6 products from the Microsoft online store, and re-sold the vast majority of the CSV on an
7 online marketplace called Paxful.
8 In July 2019, law-enforcement agents searched Kvashuk’s lakefront home in
9 Renton. Kvashuk purchased the home using approximately $1.675 million in criminal
10 proceeds in April 2018. Inside the home, agents found numerous records that
11 incriminated Kvashuk, such as: (1) an electronic document that contained Kvashuk’s
12 working notes during the criminal scheme, including the email addresses and other log-in
13 information for the compromised test accounts; (2) screenshots of 5x5 codes, which had
14 been purchased using the compromised test accounts and displayed on Kvashuk’s
15 computer monitor at the time of purchase; (3) files that that tracked numerous 5x5 codes
16 that had been purchased using the compromised test accounts; and (4) proof that Kvashuk
17 had installed tools on his digital devices that anonymized aspects of his internet activity.
18 Agents also found the script for a computer program that Kvashuk had created
19 called “purchasetest.” The “purchasetest” program automated the process of stealing
20 CSV from test accounts, and spared Kvashuk from the time-consuming steps of logging
21 into various accounts, placing orders, receiving confirmations, and tracking 5x5 codes.
22 The “purchasetest” program was critical to the fraud because it allowed Kvashuk to steal
23 a massive amount of CSV in a relatively short time. For example, Kvashuk used the
24 purchasetest program to steal over $1 million in CSV via the “zabeerj2” account in a little
25 over a day.
26 Kvashuk’s Knowledge Of His Wrongdoing
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UNITED STATES ATTORNEY
KVASHUK/SENTENCING MEMORANDUM - 3 700 S TEWART S TREET, S UITE 5220
S EATTLE, W ASHINGTON 98101
CR19-143JLR (206) 553-7970
Case 2:19-cr-00143-JLR Document 171 Filed 11/02/20 Page 4 of 9

1 The evidence showed that Kvashuk knew he was committing crimes and went to
2 great lengths to conceal them. Of the approximately $10 million in CSV that he stole
3 from Microsoft, Kvashuk purchased less than 1% using the vokvas account assigned to
4 him. Rather, Kvashuk purchased the vast majority of CSV using other UST members’
5 test accounts in order to frustrate Microsoft’s ability to tie him to the thefts. Kvashuk lied
6 to Microsoft investigators at two separate recorded interviews. Kvashuk used the Private
7 Internet Access (“PIA) internet-anonymization software to erase his digital trail. After
8 selling stolen CSV on Paxful.com, Kvashuk typically took the bitcoin he earned and ran
9 it through “mixers” before depositing it in his Coinbase account.
10 Kvashuk also filed false tax returns that concealed the income from his criminal
11 scheme. As IRS Revenue Agent Paul Shipley testified at trial, Kvashuk underreported
12 his income for both the 2017 tax year and the 2018 tax year. More specifically: (a)
13 Kvashuk reported $114,103 in income for 2017, even though his actual income,
14 accounting for unreported CSV, was $1,085,237; and (b) Kvashuk reported $83,895 in
15 income for 2018, even though his actual income, accounting for unreported CSV, was
16 $7,469,625.
17 II. PROCEDURAL HISTORY
18 Kvashuk was arrested on July 16, 2019, and has been in custody since. The jury
19 returned its verdicts on February 25, 2020, and convicted Kvashuk of the following
20 charges: access device fraud (Count 1), unauthorized access to a protected computer
21 (Count 2), mail fraud (Count 3), wire fraud (Counts 4-8), making and subscribing to false
22 tax returns (Counts 9-10), money laundering (Counts 11-16), and aggravated identity
23 theft (Counts 17-18).
24 II. PENALTIES AND SENTENCING GUIDELINES CALCULATIONS
25 The Probation Office calculates the Sentencing Guidelines as follows:
26 Count Group 1 (Access Device Fraud, Mail Fraud, Wire Fraud, Money
27 Laundering)
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UNITED STATES ATTORNEY
KVASHUK/SENTENCING MEMORANDUM - 4 700 S TEWART S TREET, S UITE 5220
S EATTLE, W ASHINGTON 98101
CR19-143JLR (206) 553-7970
Case 2:19-cr-00143-JLR Document 171 Filed 11/02/20 Page 5 of 9

1 Base offense level 7 (§ 2B1.1(a)(1))


2 Loss over $9.5 million 20 (§ 2B1.1(b)(1)(K))
3 Unauthorized access device 2 (§ 2B1.1(b)(11))
4 Sophisticated means 2 (§ 2B1.1(b)(10)(C))
5 Total 31
6
7 Count Group 2 (False Tax Return)
8 Base offense level 20 (§§ 2T1.1(a)(1), 2S1.3(c)(1))
9 Income from crime 2
10 Total 22
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12 As discussed below, the United States urges the Court to apply two additional
13 enhancements: use of a special skill (to Group 1) and obstruction of justice (to Groups 1
14 and 2). This would result in a total offense level of 35, an advisory Guidelines range of
15 168-210 months, and – with the 24-month consecutive sentence for Aggravated Identity
16 Theft factored in – an effective sentencing range of 192-234 months.
17 Use of a Special Skill
18 Kvashuk’s use of his computer programming skills to commit the fraud triggers a
19 two-point enhancement for use of a “special skill” under Section 3B1.3 of the Guidelines.
20 The provision applies if the defendant: (a) “used a special skill;” and (b) used the skill “in
21 a manner that significantly facilitated the commission or concealment of the offense.”
22 U.S.S.G. § 3B1.3. The skill must be “pre-existing” and “legitimate.” United States v.
23 Green, 962 F.2d 938, 944 (9th Cir. 1992).
24 Kvashuk’s computer programming is a “special skill.” The Guidelines defines
25 “special skill” as “a skill not possessed by members of the general public and usually
26 requiring substantial education, training or licensing. Examples would include pilots,
27 lawyers, doctors, accountants, chemists, and demolition experts.” U.S.S.G. § 3B1.3
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UNITED STATES ATTORNEY
KVASHUK/SENTENCING MEMORANDUM - 5 700 S TEWART S TREET, S UITE 5220
S EATTLE, W ASHINGTON 98101
CR19-143JLR (206) 553-7970
Case 2:19-cr-00143-JLR Document 171 Filed 11/02/20 Page 6 of 9

1 comment. (applic. note 2). “Although the Guidelines provide that special skills “usually”
2 require substantial education, training or licensing . . . such education, training or
3 licensing is not an absolute prerequisite for a special skill adjustment.” Green, 962 F.2d
4 at 507. Accordingly, courts have found that a variety of skills qualify as “special skills,”
5 including ability to safely drive an 18-wheeler and advanced radio operator.” Id.
6 The Ninth Circuit has held that “sophisticated computer skills” may qualify as
7 “special skills.” United States v. Petersen, 98 F.3d 502, 506 (9th Cir. 1996). Kvashuk’s
8 resume shows that he is a trained and highly experienced software engineer. Exhibit A,
9 Trial Exhibit 212. Kvashuk earned a master’s degree, studying (among other things)
10 “web & object programming” and “database management.” Kvashuk worked in several
11 programming jobs, and was Chief Technology Officer of a start-up. Id. Kvashuk’s
12 advanced programming talent is a “skill not possessed by members of the general
13 public[.]” U.S.S.G. § 3B1.3 comment.
14 Kvashuk’s programming experience “significantly facilitated” his fraud. U.S.S.G.
15 § 3B1.3 (emphasis added). The Ninth Circuit has explained that the enhancement applies
16 “if the special skill made it significantly easier for the defendant to commit or conceal the
17 crime.” United States v. Petersen, 98 F.3d 502, 506 (9th Cir. 1996) (emphasis added,
18 citation and internal quotation marks omitted). Kvashuk’s computer skills were critical
19 to the fraud, as they enabled him to write the “purchasetest” software program that
20 automated his theft of CSV.
21 The evidence showed that, in order to manually obtain CSV from a test account,
22 Kvashuk would have to log into the account, select CSV to purchase from the Microsoft
23 online store, execute the order, receive a confirmation email, and then record and track
24 the 5x5 codes. At some point, Kvashuk created “purchasetest,” which automated the
25 process and allowed him to commit fraud on a massive scale. For example, Kvashuk
26 used “purchasetest” to obtain over $1.3 million in CSV via the “zabeerj2” test account in
27 a little more than a day. Accordingly, the “special skill” enhancement applies.
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UNITED STATES ATTORNEY
KVASHUK/SENTENCING MEMORANDUM - 6 700 S TEWART S TREET, S UITE 5220
S EATTLE, W ASHINGTON 98101
CR19-143JLR (206) 553-7970
Case 2:19-cr-00143-JLR Document 171 Filed 11/02/20 Page 7 of 9

1 Obstruction of Justice
2 Section 3C1.2 provides for a two-level enhancement if the defendant “willfully
3 obstructed or impeded, or attempted to obstruct or impede, the administration of justice
4 with respect to the investigation, prosecution, or sentencing of the instant offense of
5 conviction,” and “the obstructive conduct related to . . . the defendant's offense of
6 conviction and any relevant conduct[.]” Application Note 4 lists committing “perjury” as
7 an example of covered conduct.
8 Kvashuk committed perjury during the trial. He denied that he intended to defraud
9 Microsoft, and claimed that the fraudulent scheme was actually part of a secret project
10 intended to benefit Microsoft. Kvashuk admitted to lying to his tax preparers and failing
11 to report income on his tax returns, but claimed that he did not intend to defraud the IRS.
12 This testimony was outlandish and was rejected by the jury. The two-level obstruction
13 enhancement applies.
14 III. SENTENCING RECOMMENDATION
15 This is a case of pure greed. Volodymyr Kvashuk had a life that many people
16 would envy: at age 24, he had a master’s degree and was making $116,000 a year in his
17 dream job at Microsoft. Nevertheless, he decided to embark on a massive fraud scheme
18 and steal millions from his employer. When Microsoft shut down two of the test
19 accounts Kvashuk was using, he switched to a third account and used his “purchasetest”
20 program to steal another $1.3 million in a final frenzy.
21 Kvashuk used the proceeds to live the life of a millionaire, driving a $160,000 car
22 and living in a $1.6 million waterfront home. Kvashuk’s scheme involved lies and
23 deception at every step. He put his colleagues in the line of fire by using their test
24 accounts to steal CSV. Rather than taking responsibility for his crimes, he testified and
25 told a serious of outrageous lies. There is no sign that Kvashuk feels any remorse or
26 regret.
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UNITED STATES ATTORNEY
KVASHUK/SENTENCING MEMORANDUM - 7 700 S TEWART S TREET, S UITE 5220
S EATTLE, W ASHINGTON 98101
CR19-143JLR (206) 553-7970
Case 2:19-cr-00143-JLR Document 171 Filed 11/02/20 Page 8 of 9

1 Although Kvashuk’s crimes are serious, he is young and has no criminal history.
2 Furthermore, Kvashuk will almost certainly be deported. Accordingly, the United States
3 recommends a below-Guidelines sentence of 96 months of imprisonment for Counts 1
4 through 16. In conjunction with the mandatory 24 months of imprisonment for Counts
5 17 and 18, the total recommend sentence is 120 months and three years of supervision.
6 Kvashuk is also responsible for $8,344,586.31 in restitution. This figure is the
7 total value of CSV that was actually redeemed by the third parties who purchased stolen
8 gift cards from Microsoft. Docket no. 1, Complaint, para. 14. The restitution amount is
9 less than the loss amount $10 million because Microsoft was able to block the redemption
10 of roughly $1.8 million in CSV.
11
12
DATED this 2nd day of November, 2020.
13
14 Respectfully submitted,
15 BRIAN T. MORAN
16 United States Attorney
17
18 /s/ Michael Dion
MICHAEL DION
19 Assistant United States Attorney
20 700 Stewart Street, Suite 5220
Seattle, WA 98101-1271
21 Telephone: (206) 553-7729
22 Fax: (206) 553-0882
E-mail: Michael.Dion@usdoj.gov
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UNITED STATES ATTORNEY
KVASHUK/SENTENCING MEMORANDUM - 8 700 S TEWART S TREET, S UITE 5220
S EATTLE, W ASHINGTON 98101
CR19-143JLR (206) 553-7970
Case 2:19-cr-00143-JLR Document 171 Filed 11/02/20 Page 9 of 9

1 CERTIFICATE OF SERVICE
2 I hereby certify that on November 2, 2020, I electronically filed the foregoing with
3 the Clerk of the Court using the CM/ECF system which will send notification of such
4 filing to the attorney(s) of record for the defendant.
5
6 /s/ Elizabeth Gan
7 ELIZABETH GAN
Legal Assistant
8 United States Attorney’s Office
700 Stewart Street, Suite 5220
9
Seattle, Washington 98101-1271
10 Phone: (206) 553-4370
11 FAX: (206) 553-0882
E-mail: Elizabeth.Gan@usdoj.gov
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UNITED STATES ATTORNEY
KVASHUK/SENTENCING MEMORANDUM - 9 700 S TEWART S TREET, S UITE 5220
S EATTLE, W ASHINGTON 98101
CR19-143JLR (206) 553-7970
Case 2:19-cr-00143-JLR Document 171-1 Filed 11/02/20 Page 1 of 4
Fwd: Re: Front End Developer I Accepting Candidates

From: Volodymyr Kvashuk <kvashuk.volodymyr@gmail.com>


To: volk@microsoft.com
Date: Fri, 26 Jan 2018 10:16:04 -0800
Attachments: Volodymyr’s Rdsum&pdf (64.49 kB)

.......... Forwarded message ..........


From: ’~/olodymyr Kvashuk" <kvashuk.volodymyr@gmail.com>
Date: Oct 11,2017 10:57
Subject: Re: Front End Developer I Accepting Candidates
To: "Greg Starr" <area.start_~.randstadusa.com>
Cc:

Hi Greg, here it’s

On Wed, Oct 11, 2017 at 10:37 AM, Greg Starr <greg.starr@randstadusa.com> wrote:
Hi Volodymyr,

Can you send me your updated resume?

~ S®~t wth Mailtrack

On Mon, Oct 2, 2017 at 10:53 AM, Vova Kvashuk <kvashuk.volodvmvr@~aamail.com> wrote:


Hi Greg,
My contract has ended last week, it was great 12mo there.

On Mon, Oct 2, 2017 at 10:37 AM, Greg Starr <greg.starr@randstadusa.com> wrote:


HI Volodymyr,

Are you ending your contract with Microsoft soon?

i~ S®~t with Mailtrack

On Wed, Ju112, 2017 at 10:56 AM, Greg Starr <area.starr~~_randstadusa.com> wrote:


I can follow up with you closer to then!

On Wed, Ju112, 2017 at 10:27 AM, Vova Kvashuk <kvashuk.volodymyr@gmail.com> wrote:


Hi Greg, thank you for your offer, but I"m currently working in Microsoft and my contract ends
in 3 mo.

On Wed, Ju112, 2017 at 10:25 AM, Greg Starr <greg.starr@randstadusa.com> wrote:


Microsoft is looking for a front-end developer. Are you currently on the job market? 18
month contract. Pay Rate is open,

Front End Developer needed for Contract opportunity with Randstad


Technologies client in Redmond, WA.

USA-00002891
U.S.v. Kvashuk
CR19-143 JLR
Government’s Exhibit 212
Admitted
Case 2:19-cr-00143-JLR Document 171-1 Filed 11/02/20 Page 2 of 4
7+ years of professional industry experience

Front End development experience in HTML/CSS and 3avaScript.

Experience working with modern web technologies and 3avaScript libraries

Experienced in PHP/WordPress development

Experienced in creating custom WordPress plugins from scratch

Excellent communication skills

Experience with Regex development

Experienced with web site performance/optimization


¯
Responsibilities:
In this role you will be working on a major enterprise development website. This is a
wordpress website with PHP component. You wil/be working closely with the PM’s and the
Engineering team to enhance the website as per business needs. Good overall web
development experience is imperative. You also need to be able to work very well in a team
environment

..
Gregory K. Starr
Technical Recruiter

Randstad Technologies
1545 River Park Drive Suite 501
Sacramento_, CA 95815

Randstad Technologies has been named to Inavero’s 2014 Best of StaffingTM Client and
........ Talent lists! Best of Staffing, presented by CareerBuilder, is the nation’s only award
recognizing staffing organizations that deliver exceptional service to the clients and talent
they serve.

This email message k for the sole use of the intended recipient(s) and may ¢onta~ conVentUal and priv~eged
informatien. Any unauthorized review, use, d~bsure or d~tdbutien is prohib~ed. ]~you are not the ~tended recipient,
please contact the sender by reply ema| and destroy all copies of the orkj~al message.

Best regards,

~’916~ 256-3673
. .
t545 River Park Drive Suite 501
Sacramento, CA 95815
W: http:!ltechnologies.randstad~sa.comi

USA-00002892
212-002
Case 2:19-cr-00143-JLR Document 171-1 Filed 11/02/20 Page 3 of 4

Randstad Technobgies has bees named to ~nave~o~s 20S4 Best of StaMsg~ O~ient and Tabnt
~ists! Best of 8ta~ng0 p~esent®d by ©a~®e~Bui de~0 is the nations on~y award recognizing sta~ng

1916~ 256-3673

W: http:!itechnobgiesorandstadusaocomi

Randstad Technologies has been named to ~navero~s 2014 Best of Ste~ngTM C~iest and Talent
Bast of Sta~ng0 presented by CareerBui~der0 is the nations on~y award recognizing sta~sg
o@anizations that de~ive~ except~ona~ se~ce to the o~ents and tabnt they se~e~

This ema! message is for the sole use of the intended recipient(s) and may contaiq confidential and priv~.,ged ~formatbn. Any
unauthor#ed rev~w, use, discbsure or distributbn ~s prohib~6d. If you are not the intended recipient, please contact the sender
by reply email and destroy a| copies of the oricjina~ message.

(916) 256-3673

Randstad Technologies
W: http:iAech no~ogies.randstad usaoco~Z

Randstad ~eehnobgies has been named to ~nav®~o°s 2014 Best of StaMngTM C~ient and Talent ~ists!
Beat of StaMng0 p~ese~ted by Caree~Builde~0 is the netien°s on~y award ~e~gnizing sta~n9
organizations that de~ver exoeptbna~ sew~ to the c~ents and ta~est they sewe
This email message ~s for the sole use of the intended recipient(s) and may conta~ confidential and privleged ~formatbn. Any
unauthorized review, use, dbcbsure or d~ributbn is prohibited. ~ you are not the intended recipient, please contact the sender by
reply email and destroy a| cop~es of the ordinal message.

Best regards°

USA-00002893
212-003
Case 2:19-cr-00143-JLR Document 171-1 Filed 11/02/20 Page 4 of 4

kvashuk.volodymyr@g mail.com
Se~wa~e ~esig~ ~eer (~gi~eeri~g}
Microsoft (via Experis)
951-397-8122

~ Worked on UI features for microsoftcom ca~ team with use of ember-cli


Seattle, WA
~ Used Selenium. Mirage, QUnit, Phantomflow to build aplication and Ulregression testing

SearchDom

Lead the development of SEO SaaS from scratch with C#/ASP.NET and AngularJS
Created AI prediction & regression model with use of AzureML

Best Software INC


0~/2 ~5 08Y20~5 K~t WA

s Configured and i~stalled 6PS hardware setup VPS to receive the signal
s Full ~aek development using C#/ASR~, AngularJS, J~ue~, Firebase and JavaSeript
s Created and i~plemented P~P scripts, manage databases, required different queries depending
on the ~eeds

SeXwa~e
ZoomSupport
~20 4 - 0&/2015
Dealing with daily tickets, troubleshooting and cleaning customers windows system
English
Part of the position was selling subscription, got an award as a best seller

Web developer
Ukrainian
Designzway
04~420~ - ~0/2014

Russian s Building up reusable templates with HTMLS/CSS3/JavaScript/ARIA


~ Converted PSD to standards retina compliant HTML5 and CSS3

online
09~20 2 ~ 2~5
s Working on various projects as a Full Stack developer, C#/ASRNet, SQL, Local DB, Firebase,
JavaScript, AngularJs, JQuery, Bootstrap, HTML5,CSS, PHP

National University of Ostroh Academy, (Ukraine)


09/20~0 05/20!5

web & object programming, database management, economic modelling, economic cybernetics,
econometric, cryptography, modeling of economic processes (fuzzy logic methods)

USA-00002894
23_2-004