Former Netflix executive convicted of fraud after orchestrating more than $500,000 in bribes and kickbacks

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  • Ex-Netflix IT chief Michael Kail on Friday was convicted of 28 counts of fraud and money laundering.
  • Kail created a "pay-to-play" scheme, taking bribes and kickbacks from tech startups hoping to do business with Netflix.
  • Kail, who was indicted in 2018, must also forfeit a Los Gatos home he purchased with the funds.
  • See more stories on Insider's business page.

Former Netflix vice president of IT Michael Kail was convicted by a federal jury on Friday of 28 counts of fraud and money laundering, the US Department of Justice announced in a press release.

Kail, who was indicted in 2018, used his position to create a "pay-to-play" scheme where he approved contracts with outside tech companies looking to do business with Netflix in exchange for taking bribes and kickbacks, according to evidence presented to the jury, the release said.

Kail accepted bribes or kickbacks from nine different companies totaling more than $500,000 as well as stock options, according to the DOJ's press release.

The jury also ordered Kail to forfeit to the government a home he purchased in Los Gatos, California, using the funds he obtained through the illegal scheme.

"Bribery undermines fair competition and innovation in any business arena, and particularly Silicon Valley's highly competitive environment of cutting-edge innovation," acting US Attorney Stephanie Hinds said in a press release.

"As Netflix's Vice President of IT Operations, 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. Netflix and other companies expect and deserve honest services from its employees."

Netflix sued Kail after he left the company in 2014 to take a role as Yahoo's CIO, accusing him of fraud and breaching his fiduciary duties. Netflix declined to comment.

According to the DOJ, Kail faces a maximum sentence of up to 20 years in prison and a fine - either $250,000, twice the gross amount he pocketed as part of the scheme, or twice the amount of Netflix's loss, whichever is greatest - for each wire or mail fraud conviction, as well as up to 10 years in prison and a $250,000 fine for each money laundering conviction.

Read the original article on Business Insider


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