First Passport, now fraud: ex-MS employee charged

Former Microsoft worker whose error resulted in massive 1999 Hotmail outage also found guilty of billing company for more than $1 million in false expense reports

By Robert McMillan, IDG News Service

December 07, 2007

The former Microsoft employee associated with the company's notorious December 1999 Hotmail outage has been charged with fraud.

Carolyn Gudmundson was indicted Thursday on charges that she raked in more than $1 million during a four-year period by falsifying expense reports she filed for domain name registration charges.

Gudmundson, a former program manager at Microsoft's MSN division, is charged with using her position within the company to run a number of different scams between 2000 and 2004. According to U.S. attorneys, she would use her corporate American Express charge for domain name registration fees, but then submit copies of invoices that carried inflated charges.

In another alleged scam, she is charged with convincing 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.

Marksmen's president declined to comment for this story.

She is also accused of billing Microsoft for domain name registrations that had already been paid for its Expedia online travel service. Microsoft sold off Expedia in 2001.

Gudmundson was arrested Thursday night and is set to appear in federal court in Seattle on Friday afternoon. She faces up to 20 years in prison and a $250,000 fine on the fraud charges.

Microsoft was not immediately available to comment on Gudmundson's arrest.

This is not her first time in the spotlight. In December 1999 Gudmundson was listed as the administrative contact responsible for Microsoft's Passport.com domain when the service stopped working, knocking 60 million Hotmail users offline. The cause? Someone forgot to renew the domain name registration.