After Microsoft (NASDAQ: MSFT) canned its former chief information officer recently for inappropriate conduct, it's now turning its attention to a former manager who was in charge of the software behemoth's internet domain names. Carolyn Gudmundson was indicted late last week on 11 counts of wire fraud and seven counts of mail fraud.

The whopper: stealing more than $1 million from Microsoft and Expedia.com (a travel website), along with another California company. With all those charges, Gudmundson faces up to 20 years in prison and fines of up to $250,000.

The defendant apparently used her Microsoft corporate credit card to pay for internet domain names for the company, for which she paid highly inflated prices using doctored receipts. She didn't provide receipts in many cases as well, but still was provided reimbursement by her former employer. First of all, Microsoft should not have provided expense report reimbursements without a receipt, but that's not the issue here. Criminal fraud is.

In addition, Gudmundson filed fraudulent invoices with travel site Expedia.com for domain names she had never paid for. Somehow, she also convinced a California domain name registrar to pay a "G.M. Lossman" for transferring multiple domain names to Microsoft. That's a lot of fraud just for involving internet domain names, yes? It's quite an intricate swindle based on something very rarely looked at in corporate America -- domain name management. That is, unless large receipts start showing up in those expense reports.

[DISCLOSURE: I own MSFT shares as of 12-10-07]