How a former Netflix executive built a cheeky corruption system


Former Netflix Vice President of IT operations convicted of accepting bribes from tech vendors in exchange for being awarded contracts with Netflix, the US Department of Justice announced Friday. The former vice president’s illegal program forced his colleagues to use a variety of products, including one that suffered from “serious” performance issues and one that Netflix employees objected to because they preferred a different product for them. which the company was already paying for, the DOJ said.

Michael Kail, the former head of Netflix, has been convicted by a federal jury of wire fraud, mail fraud and money laundering. He used his position to Netflix to approve contracts for vendors who gave it bribes and bribes, the DOJ announcement said:

As Netflix’s vice president of IT operations, Kail approved contracts to purchase IT products and services from small outside companies and authorized their payments. Evidence showed that Kail accepted bribes in the form of “kickbacks” from nine tech companies providing products or services to Netflix. In return, Kail approved millions of dollars in contracts for goods and services to be provided to Netflix. Kail eventually received over $ 500,000 and options to purchase shares from these outside companies. He used his bribe payments to pay for his personal expenses and buy a house in Los Gatos, California on behalf of a family trust.

“Michael Kail wielded immense power to approve valuable Netflix deals with small tech vendors, and he rigged that process to unlock a flow of cash and bribes for himself,” the Acting American lawyer Stephanie Hinds.

Kail was vice president of IT operations at Netflix from November 2011 until August 2014, when he moved to a job at Yahoo. Netflix Kail continued in a California superior court in Santa Clara County in November 2014, but dropped the case a year later.

Kail was indicted in 2018 on 19 counts of electronic fraud, three counts of postal fraud and seven counts of money laundering. Kail was guilty on 28 of the 29 counts, the jury found him not guilty of one count of wire fraud. The jury also found that Kail’s Los Gatos house, purchased with laundered money, could be confiscated to the government. The case took place in U.S. District Court for the Northern District of California.

“Kail faces a maximum sentence of twenty years in prison and a fine of $ 250,000, either double his gross gain or double the gross loss for Netflix, whichever is greater, for each count of fraud by wire or mail, and ten years in prison and a fine of $ 250,000 on each count of money laundering, “the DOJ said. A sentencing hearing is scheduled for September 14, 2021.

Kail set up a company to receive bribes from Netflix entrepreneurs, the DOJ said.

“To facilitate bribe payments, evidence at trial showed that Kail created and controlled a limited liability company called Unix Mercenary, LLC,” the DOJ said. “Created on February 7, 2012, Unix Mercenary had no employees or commercial establishment. Kail was the sole signer of his bank accounts.

Two days prior to registering this company, “Kail signed a sales representative agreement to receive cash payments from Netenrich, Inc. representing 12 percent of Netenrich’s billing to Netflix for its contract to provide personnel and services. computers to Netflix, ”the DOJ announcement read. . “Later in 2012, Kail began receiving 15% of all billing payments that VistaraIT, LLC, a company 100% owned by Netenrich, received from Netflix. From 2012 to 2014, Netenrich paid to Unix Mercenary approximately $ 269,986 and VistaraIT paid Unix Mercenary approximately $ 177,863. Payments ceased in mid-2014 when Kail left Netflix. “

Kail also has kickback agreements with vendors Platfora, Sumo Logic, Netskope, Maginatics, ElasticBox and Numerify, the DOJ said. For example, Kail “became an advisor and received options for shares in the company Sumo Logic” in June 2012, and then “authorized and signed on behalf of Netflix a sales contract between Netflix and Sumo Logic,” said the DOJ, adding:



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