Opinion ID: 6327348
Heading Depth: 3
Heading Rank: 3

Heading: Kvashuk’s Criminal Prosecution

Text: The government learned additional details through its investigation. The name on Kvashuk’s phone account was Grigory Kvashuk. Many of the IP addresses Kvashuk used to access the Universal Store belonged to a company operating a virtual private network (“VPN”). 4 3 Evidence in the record suggests that the graphics card was indeed delivered to Kvashuk’s apartment complex even though the specific apartment number to which it was shipped did not exist. 4 When an internet user connects to a website via a VPN, it will appear to the website (which may be recording the user’s IP address) that the user is connecting via the VPN’s IP address rather than the IP address of the device where the user is located. Thus, a VPN is a tool that provides a degree of privacy. It has many legitimate uses, such as securing corporate data, preventing advertisers from collecting personal information, and avoiding suppression and censorship by foreign governments. A VPN can also be used by criminals to conceal their involvement in cybercrime, as the government argued Kvashuk did here. 10 UNITED STATES V. KVASHUK Kvashuk also had sudden, unexplained wealth. His salary at Microsoft was $116,000, and his bank account at Wells Fargo had a balance of less than $20,000 until late November 2017. Between November 2017 and May 2018, Kvashuk transferred over $2.8 million from a cryptocurrency account he held at Coinbase.com into his bank account. By examining the Bitcoin blockchain (a public ledger of Bitcoin transactions), the government determined that the Bitcoin deposits in Kvashuk’s Coinbase account came from a mixing service, which obscures the Bitcoin’s source by mixing potentially identifiable Bitcoin with other Bitcoin. Kvashuk used the cash from his Coinbase account to purchase a $162,000 Tesla Model S in March 2018 and, three months later, a $1.675 million house on the shore of Lake Washington. Through a search warrant served on Google, the government obtained Kvashuk’s Gmail messages and internet search history and learned that Kvashuk had been selling the stolen tokens on a Paxful account. Paxful.com is a peer-to-peer Bitcoin marketplace that allows users to exchange Bitcoin for gift cards, among other things. Kvashuk’s chats on Paxful with purchasers of the gift card tokens revealed that he received 55 to 60 cents worth of Bitcoin for every dollar of CSV that he sold. The government subsequently executed a search warrant on Kvashuk’s lakefront house and car and seized additional evidence tying Kvashuk to the stolen CSV. Kvashuk was Many Microsoft employees used the same VPN as Kvashuk. The VPN assigned non-unique IP addresses; more than 100 users could share one of its IP addresses at any given time. UNITED STATES V. KVASHUK 11 indicted on 18 fraud-related counts, including two counts of aggravated identity theft, 18 U.S.C. § 1028A. 5 Prior to trial, the district court denied Kvashuk’s motions to suppress the evidence obtained from his house and car and to dismiss the aggravated identity theft counts for failure to state an offense. Over Kvashuk’s objection, the court granted in part the government’s motion in limine to exclude evidence that Kvashuk had applied for asylum—in particular, a statement that he made to his tax preparer regarding his immigration status. At trial, when a juror disclosed that he had worked on the UST during the two years before Kvashuk began working at Microsoft, Kvashuk unsuccessfully moved to dismiss the juror. The jury convicted Kvashuk of all counts. Kvashuk moved for judgment of acquittal on the aggravated identity theft counts due to insufficient evidence. In addition, he moved for a new trial because the court excluded evidence of his asylum application and declined to dismiss the juror with UST experience. The district court denied both motions and sentenced Kvashuk to nine years in prison. We have jurisdiction under 28 U.S.C. § 1291. 5 In addition, the indictment charged Kvashuk with one count of access device fraud, 18 U.S.C. § 1029(a)(5), (c)(1)(A)(ii); one count of access to a protected computer in furtherance of fraud, id. § 1030(a)(4), (c)(3)(A); one count of mail fraud, id. § 1341; five counts of wire fraud, id. § 1343; two counts of filing a false tax return, 26 U.S.C. § 7206(1); and six counts of money laundering, 18 U.S.C. § 1957. 12 UNITED STATES V. KVASHUK