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Originally published Saturday, December 8, 2007 at 12:00 AM

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Ex-Microsoft worker charged with fraud

A former Microsoft employee charged with defrauding the company to the tune of $1 million intends to plead not guilty, her attorney said...

Seattle Times technology reporter

A former Microsoft employee charged with defrauding the company to the tune of $1 million intends to plead not guilty, her attorney said Friday.

Carolyn M. Gudmundson, a 44-year-old Kirkland woman, is charged with 11 counts of wire fraud and seven counts of mail fraud stemming from a complicated set of transactions she allegedly orchestrated to channel payment for Microsoft and Expedia Internet domain names to herself.

She appeared Friday in U.S. District Court in Seattle after being arrested at her home Thursday night. She was released on her own recognizance and is scheduled to appear for a formal arraignment next Thursday.

A grand-jury indictment and a statement from the U.S. Attorney's Office allege Gudmundson defrauded the companies in several ways:

As a program manager in Microsoft's MSN Division, she used her Microsoft corporate American Express card to pay for the acquisition, registration and renewal of Internet domain names. She altered credit-card receipts to show she paid higher prices and used them to support "false and fraudulent amounts claimed on her reimbursement requests to Microsoft, " the U.S. Attorney's Office said.

She also allegedly became an Expedia vendor and submitted invoices to that company, payable to herself, for domain-name registrations that had already been paid through an arrangement between Microsoft and Expedia.

The indictment further alleges that Gudmundson requested Microsoft reimburse Marksman, a Glendale, Calif., company, for domain names it purchased on behalf of Microsoft. She then requested that Marksman send checks to a fictitious person named G. M. Lossman, who resided at the same address as Gudmundson's mother, according to court papers.

The indictment states that the payments supposedly compensated for the transfer of domain names to Microsoft, many of which Microsoft already owned. Gudmundson requested that the payments from Marksman be sent to her at Microsoft so that she could deliver them to Lossman personally, according to the indictment.

The indictment said checks and wire transfers were deposited to accounts held in Gudmundson's mother's name and her own. It lists 18 transactions, by wire and mail, between June 29, 2000, and Jan. 22, 2004. They ranged in value from $13,620 to $112,295 and totaled $797,362.

Gudmundson, a Seattle native and Western Washington University graduate, disputes the charges and the amounts listed in the indictment, said her attorney, C. James Frush, who called it a "very complicated situation."

"Many of the things that Mrs. Gudmundson was doing were in the normal part of her job and she was authorized to do them," Frush said in an interview outside the courtroom Friday. According to the indictment, her job responsibilities included maintaining Microsoft's domain-name registration and renewal program and working with the company's trademark group.

Assistant U.S. Attorney Kate Crisham said the amounts are accurate.

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"I think that we can prove in the trial that the amount of loss to Microsoft was over $1 million," she said.

Gudmundson worked at Microsoft from 1987 to 2004, when she resigned in connection with the fraud accusations, Frush said. She paid the company some $30,000, which she hoped would resolve the matter, he said.

The case was brought to authorities' attention by Microsoft and the investigation by the U.S. Postal Inspection Service was long, Crisham said.

In a statement, Microsoft said, "We take employee theft seriously and have internal measures in place to help identify fraudulent activities."

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com

Copyright © 2007 The Seattle Times Company

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