Fraud Friday – “Office Space” Scheme Comes to Life at Microsoft

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Anyone who has ever worked in an office environment is familiar with the very-specific, um, peculiarities of working in close quarters with a bunch of other hominids wearing uncomfortable clothing and engaging in forced camaraderie.

Having grown up very much working class, I found that the quasi-white-collar office environment is way different than a blue-collar setting in a myriad of ways, some better (I’m telling you, most people don’t properly appreciate the miracle of indoor climate control), and of course, some worse (don’t get me started on “teambuilding” exercises. In jobs where you do real work, that’s called Getting Shit Done.) I just don’t think humans are well-suited to being confined to little artificial physical boxes and staring at glowing screens all day – it makes us slowly go insane.

Nobody captured the bizarre, utterly farcical nature of the late 20th century western office workplace like Mike Judge did with his cult-classic film Office Space. Having been a “knowledge worker” for 15 years now, I can say with total confidence that I have yet to work in an office where the employees don’t know most of the film’s dialogue by memory. It’s as if Judge and his writing and production team had a camera in almost every Dunder-Mifflin-esque office in America in the late 1990’s. So much resonates: The clueless boss, the soul-crushing administrivia, the utterly unstoppable inertia of pointless bureaucracy. If by some twist of fate you haven’t seen this movie, stop what you are doing and go find it and watch it. Highly recommended.

[Spoiler Alert]

In one of the main plot beats of the film, protagonist Peter Gibbons (Ron Livingston, playing the role of a lifetime), and his much-maligned office drone buddies Michael (Bolton!) and Samir, are discussing how to achieve financial independence and thus freedom from the soul-sucking hell that is Initech, their blandly malevolent employer.

Peter confides in his colleagues that he’s developed software code that can take the “fractions of a penny” from various financial transactions that Initech’s software manages, and diverts those micropayments into his own personal external bank account. Hilarity and moral dilemmas ensue (seriously, go watch the movie again).

The thing that always struck me about that plot element was how absolutely PLAUSIBLE it seemed. Granted, I’m no software developer, and I know that any IS security person will bore you to death with the 3,497 internal controls that every software suite contains to ensure that such a scheme is impossible in the “real world,” and yet, here we are…

https://komonews.com/news/local/jury-former-microsoft-engineer-stole-10-million-in-digital-fraud-scheme

SEATTLE – A former Microsoft software engineer was convicted Tuesday of 18 federal felonies related to his scheme to defraud Microsoft of more than $10 million, said U.S. Attorney Brian T. Moran.

Volodymyr Kvashuk, 25, a Ukrainian citizen residing in Renton, worked first as a contractor at Microsoft and then as an employee from August 2016 until he was fired in June 2018.

After a five-day trial in U.S. District Court in Seattle, Kvashuk was convicted 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.

He faces up to 20 years in prison when sentenced in June by Judge James L. Robart.

According to records filed in the case and testimony at trial, Kvashuk was involved in the testing of Microsoft’s online retail sales platform, and used that testing access to steal “currency stored value” such as digital gift cards.

Kvashuk resold the value on the internet, using the proceeds to purchase a $1.6 million lakefront home and a $160,000 Tesla vehicle, court documents say.

As the thefts escalated into millions of dollars of value, Kvashuk used test email accounts and passwords associated with other employees, according to the case file.

Kvashuk attempted to mask digital evidence that would trace the fraud and the internet sales back to him. Kvashuk then filed fake tax return forms, claiming the money had been a gift from a relative, court documents show.

In closing arguments, Assistant U.S. Attorney Siddharth Velamoor said Kvashuk “hid behind his colleagues’ names … dripping fraud and deceit every step of the way. This is a simple case – anyway you look at it, this is a crime of greed.”

Kvashuk testified at trial that he did not intend to defraud Microsoft. He claimed to be working on a special project to benefit the company.

That testimony was “a house of lies on top of a previous house of lies,” Assistant U.S. Attorney Michael Dion told the jury.

The jury deliberated about five hours before returning the guilty verdicts.

From KOMO TV in Seattle, Washington

Well, I guess they’ve got bigger things to worry about out in Washington State than a Ukrainian hacker kid, but nevertheless, the audacity of the scheme is somewhat noteworthy. Look for many more of these to come in the future.

Have a great weekend, and try not to catch COVID-19, folks!

 

Tax Evasion Tuesday – Sackler Family Wires a BILLION dollars in Opioid Blood Money Offshore Prior to Bankruptcy Declaration

Outrage Fatigue. It’s a thing, people. I don’t know about you, but I feel like the past few years have been one non-stop freakshow parade of horrors. If you’re a semi-sentient being, there’s no need for me to list them all, and I’m sure you’ve got your own personal hit parade of disturbing, enraging idiocy that you mentally project onto your bedroom ceiling each night before the Xanax/Ambien/Kava Kava takes hold and drags you down into the slumbery depths. I’ve got three words that are quite enough for me: Children in cages.

However, I’d like to think that I possess enough residual humanity to still be startled into a “WTF?” moment now and then. Today was one of those moments. From FoxBusiness:

Purdue Pharma’s Sackler family wired billions through Swiss bank accounts: Report

“The Sackler family, which owns embattled OxyContin maker Purdue Pharma, may have gone to great lengths to shield their profits and fortune from litigators.

The New York attorney general’s office on Friday said the family made about $1 billion in wire transfers through Swiss bank accounts, as reported by The New York Times.

A spokesperson for the company declined to comment.

The Purdue family was paid more than $4 billion from Purdue Pharma over the course of about a decade.

According to Forbes, the family is worth an estimated $13 billion.

As reported by The Associated Press last week, the Sacklers shielded much of that wealth in “an intricate web of companies and trusts,” some registered in offshore tax havens like Bermuda.

New York has issued subpoenas to 33 investment advisers and banks to get more information on funds transferred out of Purdue.

Earlier this week, there was a tentative settlement announced for the part Purdue Pharma played in the national opioid crisis – which would require the company to file for structured bankruptcy and pay $12 billion – including about $3 billion from the Sackler family.

The family would also have to give up ownership of the company and sell another one of its pharmaceutical companies – Mundipharma.

Not everyone is satisfied with the terms, however.

When there is a bankruptcy filing, often all other litigation is halted. It is unclear whether a settlement would shield the family, however.

New York Attorney General Letitia James said in a statement on Wednesday that the company continued to “lowball the millions of victims of the opioid crisis,” adding that she would “continue to seek justice for victims.”

Sixteen states have sued family members by name.

The Sacklers paid $75 million as part of a $270 million settlement with the state of Oklahoma earlier this year.

Opioid addiction has resulted in hundreds of thousands of American fatalities.”

 

Outrageous doesn’t BEGIN to cover the depth and breadth of the “alleged” actions of the Sackler family and their army of paid enablers – the shadow inhabitants of the global underground finance infrastructure. It would be most interesting to find out the current locations of the transferred funds. Someone should get on that.

If the Sacklers were your garden-variety members of the kleptocratic elite, these revelations would hardly raise an eyebrow anymore. OF COURSE weasely billionaires are going to use any means at their disposal to avoid giving up even a nickel to the jurisdictions whose populations they’ve fleeced. It’s kind of built into the Late Stage Capitalism model.

In this particular instance, however, it’s appears that the Sacklers and their front corporation, Purdue Pharma, have stepped over the invisible line that even the present administration realizes exists. The public has a really difficult time understanding how mortgage securitization blew up the global financial system a decade ago, but even the slowest among us get how a drug dealer operates, and we’ve all seen, directly or indirectly, to paraphrase Neil Young, The Needle and the Damage Done.

The hubris is staggering. A family already worth an estimated $13 billion goes to enormous lengths, breaking all sorts of laws, to hide a billion dollars beyond the reach of virtually anyone, international law enforcement authorities included. Think about that: They were willing to brazenly wire unfathomable sums of money via the SWIFT interbank transfer system, knowing full well that U.S. authorities would receive SAR reports on the transfers, and literally NOT GIVING A SHIT and doing it anyway. The only logical explanation: They figured they would get away with it. That they were, quite literally, above the law. This would be bad enough if the transferred money was earned ‘honestly,’ through corporate M&A or selling shares in one of their companies. But this cash is the very definition of Blood Money. Each dollar in that fortune represents human suffering, and the Sacklers know it, and simply do not care.

I desperately hope the Southern District of New York can get individual indictments and eventual convictions on these despicable weasels, but I won’t hold my breath.

Thoughts? Questions? Comments? email me at jdmcdaid@gmail.com, or follow me on Twitter @JustinMcDaid, Facebook, or LinkedIn.

 

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