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Carolyn Gudmundson, the former Microsoft domain manager who has admitted stealing hundreds of thousands of dollars from the company, is set to be sentenced this afternoon in U.S. District Court in Seattle.

In a new court filing (PDF, 13 pages), the U.S. attorney recommends a prison sentence of two years and three months for Gudmundson, followed by three years of supervised release. After an earlier disagreement, the U.S. attorney and Gudmundson's attorney (PDF, 18 pages) have agreed on the restitution Gudmundson owes to Microsoft: $923,641.60.

Gudmundson has submitted a letter to U.S. District Judge Ricardo Martinez that lays out, in detail, the circumstances that she says contributed to her actions, which included doctoring expense reports for domain names purchased on her corporate credit card.

"I have been trying to figure out why I did what I did," she writes, describing the financial challenges inside her family as a child and an adult. She concludes the letter by apologizing. She says she accepts responsibility for her actions and asks for a second chance.

This PDF (35 pages) contains that letter, along with letters of support from her friends, family and former co-workers. Among other things, Gudmundson writes that she used the money to support her brother and mother. She says she also felt financial pressure from her husband, who is now divorcing her. Gudmundson continues ...

I did not want to say no and admit I did not have the money to provide it. The stock options he thought we had were long gone. I borrowed against my 401K, took loans and borrowed money to keep everyone going. Of course, there were all the items that go along with having a family, home and friends too. I was a big Microsoft executive and had to live up to those expectations.

I used my corporate American Express card for business expenses as well as buying personal items. This was acceptable as long as you paid for your personal expenses and did not become late with payments on your corporate card. In addition, the company let you keep and use your miles that were earned. I sold my stock options to pay for my charges but eventually the stock options I had been awarded were gone. I had nothing to fall back on. While on maternity leave, I was contacted to turn in the receipts for a few expense reports. I did not have the requested documentation so I turned in receipts from prior reports. I was worried but no one ever contacted me regarding it. So, I continued but began to alter the amounts in order to match the totals expensed. Again, no one questioned my reports because as the domain manager, I was constantly making large purchases. At the time, we used my corporate card to buy domains. My managers approved the reports. There were legitimate charges integrated with the falsified ones. Eventually, the purchase order program I had developed was approved and the need to use the corporate credit card to purchase domains was no longer required.

Here's what the U.S. attorney's office has to say in its sentencing recommendation:

Defendant's history and characteristics, on balance, do not weigh in favor of a greater or lesser sentence. In Defendant's favor, it is undisputed that she has no other criminal convictions, and she has family members who care about her, including her two daughters. Yet, unlike many defendants who appear before this Court, who fight substance abuse addictions or are otherwise marginalized members of society, Defendant is a well-educated, intelligent woman with a loving family who has been provided with many educational and professional opportunities throughout the course of her life.

Indeed, Defendant's career at Microsoft appears to have been on an upward trajectory, and she likely had many opportunities for personal and professional advancement, whether at Microsoft or elsewhere. But rather than continuing to work hard and advance in her career, Defendant instead opted to embezzle money from her long-time employer in order to finance a lifestyle beyond her means. Perhaps in hindsight, now that Defendant is being forced to take responsibility for her actions, she will recognize that she ought to have considered the consequences of her actions and how her criminal activity affected those she loves.

I'll be in court for the sentencing. Check back later for the outcome.

Update, 2:45 p.m.: The sentence: 22 months. See this follow-up post for details.