Ex-Netflix VP found guilty of awarding tech contracts in exchange for bribes

When I started working professionally, I always thought that eventually the best product wins. Then I was struck with this kind of reality, where the product with the biggest people network wins.

Similar thing ended up being true for me. Without a good support network, I won't end up anywhere even if I have above average abilities.

The most obvious and legal form of kickbacks is just regular sales process that involve a lot of nice dinners or even trips to conferences on nice resorts. One of my old boss owned his company and it was so normal for him to go out for 4 hour lunches with clients.

We would hear that this or that product was forced on us because this or that senior executive's friend/relative owned the company producing that product.

Fighting against having to use crappy tooling because of this was one of the nuisances that we'd have to deal with a few times a year.

"Kail set up a corporation to receive bribes from Netflix contractors, the DOJ said."

Super blatant. I don't get how he expected to get away with it? You'd think there's a fair chance his employment contract at Netflix would prohibit having an outside interest like this. Plus you know, maybe learn how brown paper bags work. Or find a relative who has a consulting business to bill. Maybe read what cryptocurrency is. Seems like there are a lot of things you could do that aren't making a separate company which has bank accounts and files returns. Oh yeah and don't buy a house with it, a house can be confiscated.

Anyway he should have read the newspapers more. Clearly the thing to do is like your CTO or how politicians do it, just get them to pay you with a "job" after you leave. Perhaps he just hadn't reached scale yet like you can with political roles. Those £38B we spent on track & trace here in the UK will surely come back to the right pockets somehow.

$500,000 seems like probably a little less than one year salary for a Netflix VP. But then again people have been known to engage in fraud for much less.

In some he personally got shares.

I guess this executive decided to go a bit beyond the normal practices.

The plan by which most criminals enter crime, entails not being caught.

[1] https://www.ribbonfarm.com/2009/10/07/the-gervais-principle-...

Is it bribing if there isn't a quid pro quo? I can give a congressperson a bunch of money with a note attached saying "Don't vote for bill XYZ", but there is no promise or even acknowledgement from the congressperson that they will do anything at all for you.

In my mind his crime is much more severe than shoplifting or paying by fake banknotes.

> why do we taxpayers need to pay

Both, Netflix as a company, and its shareholders are also tax payers, and can expect to be protected from fraud/crimes using taxpayers money.

Big exec launches a project costing something like 2 million dollars and two years to make an already working piece of in-house IT infrastructure reliant on a third-party product that charges per API call.

The project finishes up, then he quits and joins the board of the company that provides said third-party product. Next exec comes along, realises that they're spending a million dollars a year on unnecessary API calls, spends another two years and two million dollars to rebuild a new version of the old system.

The naughty exec won't be offered another job at Telstra, but got away scott free because Australian law regarding white collar crime is toothless.

Also, bribery is insidious. Once some happens, there is considerable pressure for competitors to also engage in bribery to stay in business. So it is important to stop earlier, where you can, because over time it can be very hard to root out. Like murder and theft, it will happen sometimes, but you're trying to discourage it.

Everything I run across refers to public official and public trust.

I wonder if there are any lawyer out there that can clarify this?

I own my own company. I should be able to award any all contracts to who bribes me the most money?

A particular company came to my mind reading this.

It starts with an O.

If you accept considerations for your own interest - like payments or offers of subsequent employment and so on, then you are defrauding your employers. Since the payments mean that effectively there is a transfer of money from your employer to the contractor and then to you I believe that this is also a kind of theft.

At the least, it's dishonest - unless your employer understood you were doing it - in which case it's a kind of hidden remuneration I guess.

So my guess is that while bribes in private sector are not illegal per se, you can still go to jail for the decisions made as the result of taking the bribe.

It outlines that Michael Kail was convicted of wire fraud, mail fraud, and money laundering, so it seems the "preference of products for payments" was just a small piece of the puzzle here.

California though (but it doesn’t seem this was charged by the state) explicitly has a law criminalizing commercial bribery where if you take money secretly and privately to make a decision at your job, you have committed a felony.

Apparently he lied to the CEO for personal financial gain. That's fraud, isn't it?

Fraud and money laundering - it clearly says so, in the second paragraph in the article:

> Michael Kail, the ex-Netflix executive, was convicted by a federal jury of wire fraud, mail fraud, and money laundering.

For example if a company came and gave him §10000 in hand and he reported in on his taxes he would probably be alright but reading the article I can see he was found guilty of multiple cases of money laundering - like you indicated that is against the law not the 'bribe' per se, furthermore he got convicted of fraud - I think because as it says

"To facilitate kickback payments, the evidence at trial showed that Kail created and controlled a limited liability corporation called Unix Mercenary, LLC," the DOJ said. "Established on February 7, 2012, Unix Mercenary had no employees and no business location. Kail was the sole signatory to its bank accounts."

So basically the company he created was involved in fraudulent activities.

There may be other forms of fraud involved here - for example if he said to Netflix I think we should use X because it is the best but he actually wants to use X because he is getting 10000 for it - I could envision a law being written in such a way that it could be interpreted as him defrauding Netflix of 10000 worth of value.

on edit: I can also see in the article it says "When an inquiry from the Netflix CEO ensued, Kail falsely denied that he was formally working with Platfora. Kail resigned from his advisory position at Platfora the next week." so he explicitly stated he was not doing something while getting value for doing that thing - that would generally be considered fraudulent.

At much smaller scale, engineer on my team had brother who owned business organizing offsites/company retreats. Engineer suggested we use his brother company for our team offsite (and told what a cool rope courses they do) and disclosed affiliation (that he is his brother). After that I checked websites, looked at other options and decided to go with engineer's brother company. I email HR just in case and it was totally fine. Key was that I (unaffiliated with brother company) made final decision and disclosure of relationship. Event was a blast and frankly I feel that we got more than we paid as brother worked extra hard to make sure everything went smooth and cool.

I recommended that company to other managers and I know that a few other teams had events with them. At this point it was twice removed (those managers did not even know engineer on my team) and no disclosure was necessary.

Disclosure is key.

2. "Standard" in-person fraud is prosecuted by the states, but fraud over mail or wires is a federal crime, so if any long-distance communications were involved then the federal justice system can (also) get involved.

Depending on how it was handled, it might be that the companies that paid the bribes have enough plausible deniability to avoid prosecution.

This sort of fraud is quite common in white collar crime

He set up a corporation and was a paid ‘advisor’ at a company Netflix was paying large amounts of money. And the pure number of times he did it.

Criminal’s greed always bring them down and this guy went massive.

I can imagine plenty of new startups that do not know how enterprise sales are done, looking for an advisor who is high up and has connections, and expect him to disclose the relationship prior to any purchase order being made by Netflix. The startup has no idea about the inner workings, unless it was extremely explicit, but it usually isn't.