United States v. Kvashuk, CASE NO. CR19-0143JLR

• Decision Date: 06 March 2020
• Docket Number: CASE NO. CR19-0143JLR
• Citation: 443 F.Supp.3d 1263
• Parties: UNITED STATES of America, Plaintiff, v. Volodymyr KVASHUK, Defendant.
• Court: U.S. District Court — Western District of Washington

443 F.Supp.3d 1263

UNITED STATES of America, Plaintiff,

v.Volodymyr KVASHUK, Defendant.

CASE NO. CR19-0143JLR

United States District Court, W.D. Washington, at Seattle.

Signed March 6, 2020

Michael Dion, Michelle Jensen, Siddharth V. Velamoor, US Attorney's Office, Seattle, WA, for Plaintiff.

Joshua Sabert Lowther, Pro Hac Vice, Lowther | Walker LLC, Atlanta, GA, Gregory Geist, Mohammad Ali Hamoudi, Federal Public Defender's Office, Jeffrey David Cohen, Law Offices of Jeffrey D. Cohen, Seattle, WA, for Defendant.

ORDER DENYING MOTION FOR JUDGMENT OF ACQUITTAL

JAMES L. ROBART, United States District Judge

I. INTRODUCTION

Before the court is the oral motion for judgment of acquittal under Federal Rule of Criminal Procedure 29 made by Defendant Volodymyr Kvashuk during trial. (See 2/21/20 Minute Entry (Dkt. # 125).) The court has considered the motion, the relevant portions of the record, the argument of the parties, and the applicable law. Being fully advised, the court DENIES Mr. Kvashuk's motion for judgment of acquittal.

II. BACKGROUND

A. The Indictment

Plaintiff United States of America ("the Government") charged Mr. Kvashuk with 18 counts based on Mr. Kvashuk's alleged scheme to defraud Microsoft Corporation, his former employer, of more than $10 million in digital currency. (See generally 2d Sup. Indictment (Dkt. # 61).) Specifically, the Government charged Mr. Kvashuk with one count of access device fraud in violation of 18 U.S.C. § 1029, one count of access to a protected computer in furtherance of fraud in violation of 18 U.S.C. § 1030(a)(4), one count of mail fraud in violation of 18 U.S.C. § 1341, five counts of wire fraud in violation of 18 U.S.C. § 1343, two counts of making and subscribing to a false tax return in violation of 26 U.S.C. § 7206, six counts of money laundering in violation of 18 U.S.C. § 1957, and two counts of aggravated identity theft in violation of 18 U.S.C. § 1028A. (See id. ¶¶ 1-33.) Mr. Kvashuk's trial began on February 18, 2020. (See 2/18/20 Minute Entry (Dkt. # 96).) On February 25, 2020, the jury convicted Mr. Kvashuk on all 18 counts. (See Jury Verdict (Dkt. # 133).)

Mr. Kvashuk's motion seeks judgment of acquittal on Counts 17 and 18, which charge Mr. Kvashuk with aggravated identity theft. (See 2d Sup. Indictment ¶¶ 32-33.) In those counts, the Government charged Mr. Kvashuk with using the usernames and passwords for two Microsoft online store accounts in order to fraudulently obtain digital currency from Microsoft. (See id. ¶ 33.) Count 17 charged Mr. Kvashuk with using the "mstest_swfe2eauto@outlook.com" Microsoft online store account, which was assigned to account holder "A.C." (See id. ) Count 18 charged Mr. Kvashuk with using the "mstest_zabeerj2@outlook.com" account, which was assigned to account holder "Z.J." (See id. )

B. Pretrial Motion to Dismiss

Mr. Kvashuk filed a pretrial motion to dismiss Counts 17 and 18 under Federal Rule of Criminal Procedure 12.¹ (See MTD (Dkt. # 55).) Mr. Kvashuk makes two arguments in support of his motion to dismiss. First, Mr. Kvashuk argues that a charge of aggravated identity theft under 18 U.S.C. § 1028A(a)(1) requires the Government to prove that Mr. Kvashuk used the "means of identification" of a real person, but the indictment alleges only that Mr. Kvashuk used test accounts that belonged to Microsoft, who Mr. Kvashuk argues is not a real person. (See MTD at 3-6.) Second, Mr. Kvashuk argues that, in order to show he used the means of identification of "another person" as that term is used in 18 U.S.C. § 1028A(a)(1), the Government must show that Mr. Kvashuk used another person's means of identification without consent, which the indictment does not allege. (See id. at 6.)

The court orally denied Mr. Kvashuk's motion to dismiss. (See 12/16/19 Minute Entry (Dkt. # 75).) The court noted that the standard for Rule 12 motions binds the court to the four corners of the indictment and requires that the court accept the indictment's allegations as true. The court then rejected both of Mr. Kvashuk's arguments and concluded that the second superseding indictment sufficiently alleged counts for aggravated identity theft.

C. Mr. Kvashuk's Trial

At trial, M.W., a lead software engineer for Microsoft's Universal Store Team ("UST") and Mr. Kvashuk's supervisor at Microsoft, explained how Microsoft online store accounts worked for typical Microsoft online store users. M.W. testified that customers who want to make purchases from Microsoft's online store need to create a Microsoft account in order to do so. To create an account, users must provide Microsoft with an email address and a password for the account. In certain jurisdictions, users also need to enter a date of birth. Microsoft also prompts users to provide a first and last name for the account, but the email address that an individual provides to create the Microsoft store account becomes that individual's username. To sign into the Microsoft online store and make purchases, users are required to log in using their username and password. If a user purchases goods from the online store, the user must provide a payment method and a shipping address if the user purchases shippable goods.

M.W. also testified about test accounts that members of the UST create to perform their job duties at Microsoft. M.W. testified that Microsoft had a "Test in Production" or "TIP" program through which UST members test various aspects of the Microsoft online store to ensure that the store functions properly for Microsoft's customers. To participate in the TIP program, Microsoft employees create test Microsoft online store accounts. To set up test accounts, UST members create Microsoft Outlook email addresses to use as the username for the test accounts. Test account usernames start with "mstest" markers and are followed by an underscore, a unique alias selected by the UST member setting up the test account, and the "@outlook.com" or "@hotmail.com" marker (e.g., "mstest_zabeerj2@outlook.com"). The UST member creating the account also creates a password for the account to complete the account set up process.

Once a UST member sets up a test account, the UST member asks Microsoft to "whitelist" the account and provide a test credit card, or a "TIP card," for use with the test account. When Microsoft whitelists a test account, that allows the account to bypass certain protocols that Microsoft puts in place for regular consumers so that UST members can freely test the functionality of the Microsoft online store. TIP cards are artificial credit cards that Microsoft provides to UST members that UST members link to their test accounts. Linking a TIP card to a test account allows UST members to simulate the customer purchasing process without triggering a real transaction.

The Government called multiple witnesses from the IRS and Microsoft who testified that someone had used the mstest_swfe2eauto@outlook.com and mstest_zabeerj2@outlook.com test accounts to "purchase" millions of dollars of digital gift cards from Microsoft. Although Microsoft believed that the TIP program prevented testers from purchasing anything of value from the Microsoft online store, the Government's witnesses testified that if someone using a test account and a TIP card attempted to purchase a digital gift card from the Microsoft online store, the test account would receive an email that contained an authentic Microsoft digital gift card code that could be redeemed on the Microsoft online store. Evidence obtained from a search warrant executed at Mr. Kvashuk's home showed that Mr. Kvashuk had the usernames and passwords for the mstest_swfe2eauto@outlook.com and mstest_zabeerj2@outlook.com test accounts and spreadsheets listing thousands of Microsoft digital gift card codes stored on his computer. The Government also showed that IP addresses associated with Mr. Kvashuk accessed the Microsoft online store using the mstest_swfe2eauto@outlook.com and mstest_zabeerj2@outlook.com test accounts.

M.W. testified that test accounts were unique to individual UST members and that he informed the UST members that he supervised that they should not share their test accounts with other employees—though he acknowledged that some UST members had shared their accounts in the past. M.W. also stated that the test accounts were meant for use as part of the TIP program and were not supposed to be used for personal matters or other Microsoft employment matters like human resources issues or inner-office communications.

Z.J., a software engineer and UST member at Microsoft, testified that he created the "mstest_zabeerj2@outlook.com" test account and the password associated with that account that serves as the basis for the aggravated identity theft count charged in Count 18. (See 2d Sup. Indictment ¶ 33.) Z.J. testified that he stored the password for that test account on a personal document that he did not share with other UST members and that he did not recall giving any other UST members permission to use the mstest_zabeerj2@outlook.com test account. He also testified that, although he knew Mr. Kvashuk, he never shared that test account with Mr. Kvashuk or gave Mr. Kvashuk permission to use the account. Z.J. testified that he first learned that someone had made purchases of digital currency using his mstest_zabeerj2@outlook.com test account when Microsoft investigators interviewed him about purchases made with his test account.

A.C., another software engineer and UST member at Microsoft, also testified at trial. A.C.'s testimony mirrored Z.J.'s testimony. A.C. created the "mstest_swfe2eauto@outlook.com" test account and the password associated with that account that serves as the basis for the aggravated identity theft count charged in Count 17. (See id. ) A.C. testified that the mstest_swfe2eauto@outlook.com test account was programed to do automated testing. A.C. further testified that the automation process required him to store the account information and password for...