Feds charge Microsoft employee with $9 million fraud

Sales of Microsoft's high-end software were brisk last year, at least for one employee who was charged Wednesday with illegally pilfering and selling US$9 million worth of it for his own profit.

Daniel Feussner, a mid-level Microsoft engineer who headed up one of Microsoft's .Net technology projects, was arrested after a U.S. Federal Bureau of Investigation (FBI) probe uncovered a scheme, in which he allegedly ordered products through Microsoft's internal purchasing program and sold them on the street.

According to a complaint filed a day before his arrest with the U.S. District Court in Seattle, federal authorities say Feussner used his earnings to acquire a lavish car collection, a US$172,000 yacht, expensive watches and diamond jewelry.

He is being charged with 15 counts of wire, mail and computer fraud and could face a maximum of five years in prison and a $250,000 fine for each charge, according to a spokesman for the U.S. Attorney's Office in Seattle. Feussner is in jail and a preliminary hearing is set for December 20.

Microsoft released a statement on the matter, raising an issue that some analysts say most companies should worry about -- internal fraud.

"We take employee theft very seriously and realize the effects it can have on the value we provide our customers and shareholders," it said in the written statement. "We have a number of internal measures in place to identify theft and work very closely with the appropriate authorities on these matters."

While working as a manager of a speech-recognition project out of Microsoft's .Net development group, among other positions, Feussner used internal purchase orders to buy high-end server software, which he then sold for cut-rate prices while keeping the proceeds, the complaint alleges.

Orders passed through a software vendor called ClientLogic, which would mail products to Feussner. He then sold the software out of a parking lot for cash, as well as through a middleman company called Cybershop Inn, court records indicate. Some 1,700 products filtered through the scam, including development software, and copies of Microsoft's Windows operating system, beginning in late 2001, authorities said.

The FBI said that Feussner's arrest is part of a larger probe into illegal use of Microsoft's internal purchasing program.

With his loot, Feussner purchased a number of cars, including a US$95,000 Ferrari, a US$37,000 Hummer, a US$25,000 Mercedes, a Rolex watch and one of his prized possessions -- a 58-foot yacht named the Brazilian Queen -- according to court documents. A Web site, apparently hosted by Feussner, showed off his collection of expensive toys.

The Web site (which was at http://bavaria.da.ru/ but had been blocked as of late Friday) reveals quite a bit about the 32-year-old programmer, who goes by the name "The Dude," which is an apparent reference to a character in the 1998 cult movie "The Big Lebowski." On the site, he says he is from Munich, Germany, and displays pictures of his home, friends and his extensive car and motorcycle collection.

"Before I made the decision to make computer stuff my profession, I was sure that I will (sic) become a Rock Star and/or motorcycle mechanic," he wrote on his Web site. "Maybe I'll do this later."

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