Ex-Microsoft manager gets 22 months for fraud

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July 19, 2008, 10:06 AM —  IDG News Service — 

The woman formerly responsible for managing Microsoft's Internet domain names has been sentenced to nearly two years in prison for bilking her employer out of US$1 million in fake registration fees.

Carolyn Gudmundson, 46, formerly a program manager at Microsoft's MSN division, pleaded guilty in January to charges that she used her position within the company to run a number of scams between 2000 and 2004.

On Friday, she was sentenced to 22 months in prison, followed by three months of supervised release, and ordered to pay $923,641 in restitution.

According to court filings, Gudmundson used her corporate American Express card for domain-name registration fees, but would then submit copies of invoices that carried inflated charges. She also billed Microsoft for domain name registrations that had already been paid for by its Expedia online travel service. Microsoft sold off Expedia in 2001.

In another scam, she convinced a Microsoft contractor, Marksmen Inc., to send checks to her attention at Microsoft, claiming they were being used to repay a Microsoft employee, G.M. Lossman, for transferring domain names into Microsoft's control. Those checks were cashed in Gudmundson's mother's account, according to the U.S. Department of Justice.

At her sentencing, U.S. District Judge Ricardo S. Martinez suggested the sentence should serve as a deterrent to others. "Other employees who have similar opportunities to place their hands in the corporate till need to understand that society takes this sort of crime very seriously," he was quoted as saying in a Department of Justice press release.

Things could have been worse for Gudmundson. She had been facing up to 20 years in prison on the charges.

Gudmundson was also associated with Microsoft's notorious 1999 Hotmail outage, which knocked 60 million users offline. The outage happened when the passport.com domain, which was needed for logins to Hotmail, was not renewed. Gudmundson was listed as the Microsoft contact for that domain registration.

IDG News Service

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I'll be honest. I worked

I'll be honest. I worked for my share of rats at MS, and when this story came out I had the same reaction most people do "finally, one of them is finally getting theirs".

Then the court documents were released and I had a different reaction entirely. Read the PDFs linked into http://blog.seattlepi.nwsource.com/microsoft/index.asp and let me translate (we're going to ignore all the personal stuff aside from recognizing that this is an obviously timid personality that absolutely anyone could intimidate - ie, the perfect patsy from the beginning):

First, this woman (commonly described in the so-called "press" as an "executive") - is a LEVEL 59. That is, after 17 years at Microsoft, she had worked her way up to Level 59. Do you know what a Level 59 position is? IT'S AN ADMIN. You have to call them Program Managers now because MS doesn't hire full-time admins anymore (only temps). She's about 8 pay grades away from any kind of signing authority - any at all. Let's be real clear about this - a Level 59 can't authorize LUNCH.

So, now that we've cleared that up, what was she getting paid? No rocket science or NDA information there - like all major corporations, MS salary-matches, and it's well known that they salary-match - industry minus 10 or 20%. She was previously a paralegal. A quick look-see on the internet says paralegal pay is @$50k. So with the very few options a level 50-something might get, she might have been making $50k. Hmm. She's making $50k/yr, she's taking PERSONAL responsibility for more than $250k/yr. Anything about that seem wrong to anyone? Anyone?

Next. All reimbursing engines at Microsoft have always been, and remain, unreliable and broken. It can take months to get reimbursed (which does not change the due date on your bill). Asking ANYONE BUT AN EXECUTIVE to carry this kind of money on their personal corporate card is irresponsible, insane, stupid and IMHO deliberately abusive. If the guy with the signing authority to authorize that much money for something that important, couldn't or wouldn't open a corporate Purchase Order (and apparently didn't for YEARS) ... what the hell was really going on? IF YOU CAN'T GET A PO OPENED FOR THIS KIND OF OBVIOUS BUSINESS EXPENSE, IT HASN'T BEEN APPROVED AND NO ONE IS GETTING REIMBURSED. PERIOD END OF SENTANCE.

Next. That being the case - she was expensing at least 5x her annual salary for things the company had no way (and no intention) of paying for. It's entirely possible she never got reimbursed at all, which makes her actions more understandable. But we'll never know, because she signed a resignation agreement giving up all her rights (likely under duress, as it was signed on the spot and no intelligent person - certainly not a paralegal - would do that). More on that later. And to hell with common sense.

Next. Even when you're creeping up on 90 days past due and getting messages like "we know the system is broken, check back in 30 days" - you can ask for help, but all you'll get told is that managing your corporate card is YOUR RESPONSIBILTY. ie, if you couldn't afford to carry it for a while, you just shouldn't have done it. (catch-22, this will be the same asshole who gave you no choice but quitting or being fired in the first place - and this time he'll have a really big smirk on his face). And after many years at MS she should have known that. But, let's revisit that she came from the legal department, which, along with finance, is one of the only two groups in the company that follows reasonable rules of conduct and can reliably process paperwork in a timely fashion - even when something really (really) funny isn't going on.

I've personally NEVER seen anyone deeply under water on their corporate card for legitimate reasons not ask for help. I've seen a lot of people turned down, threatened, laughed at, and told that they'd just have to figure out how to bridge the gap. She did everything many other MS'ers have done - cash in stock, raid their 401k, take a loan. You figure it'll pay itself back over time to stay employed - and in the 90's, that logic actually worked, for the high-performers making real money.

All of this makes her trusting and naive, and/or easily intimidated, and because she signed a resignation agreement (which also defies all non-intimidation logic), she can't defend herself in any way, or even say anything bad about the company - ever.

Every time I think something can't lower my opinion of Mr. Ballmer's leadership, he exceeds my expectations. Because of the agreement that Ms. Gudmundson signed, we will never know the truth, but you can be sure - there's an entirely different side to this all-too-convenient witch hunt.
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Chatter, regarding: All

Chatter, regarding:

All reimbursing engines at Microsoft have always been, and remain, unreliable and broken. It can take months to get reimbursed (which does not change the due date on your bill).

This is absolutely false, as anyone else working for MS could confirm. I assume the rest of your comment is as fake as this.

Take care
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