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Netflix’s former vice president of IT operations was convicted of taking bribes from technology vendors in exchange for awarding them contracts with Netflix, the US Department of Justice announced Friday. The former Netflix VP’s illegal scheme forced colleagues to use a variety of products, including one that suffered from “severe” performance problems and another that Netflix employees objected to because they preferred a different product the company was already paying for, the DOJ said.
Michael Kail, the ex-Netflix executive, was convicted by a federal jury of wire fraud, mail fraud, and money laundering. He used his position at Netflix to approve contracts for vendors that gave him bribes and kickbacks, the DOJ announcement said:
As Netflix’s Vice President of IT Operations, Kail approved the contracts to purchase IT products and services from smaller outside vendor companies and authorized their payments. The evidence demonstrated that Kail accepted bribes in ‘kickbacks’ from nine tech companies providing products or services to Netflix. In exchange, Kail approved millions of dollars in contracts for goods and services to be provided to Netflix. Kail ultimately received over $500,000 and stock options from these outside companies. He used his kickback payments to pay personal expenses and to buy a home in Los Gatos, California, in the name of a family trust.
“Michael Kail wielded immense power to approve valuable Netflix contracts with small tech vendors, and he rigged that process to unlock a stream of cash and stock kickbacks to himself,” acting US Attorney Stephanie Hinds said.
Guilty on 28 counts
Kail was VP of IT operations at Netflix from November 1, 2011, until August 2014, when he switched to a job at Yahoo. Netflix sued Kail 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 wire fraud, three counts of mail fraud, and seven counts of money laundering. Kail was found guilty on 28 of the 29 counts, with the jury finding him not guilty of one count of wire fraud. The jury also found that Kail’s Los Gatos home, purchased with laundered money, can be forfeited to the government. The case was held in US District Court for the Northern District of California.
co-founding a venture capital-backed startup called Cybric, which was later renamed ZeroNorth.
After Kail left Netflix, The Wall Street Journal reported that the streaming company decided not to hire another VP of IT operations and that “[m]any of Mr. Kail’s former responsibilities have been given to another employee.”
“Mike’s departure allowed us to combine data center and streaming operations under one executive who serves in a very similar capacity,” a Netflix spokesperson said at the time.
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