Netflix Sues Yahoo CIO Mike Kail for Alleged Fraud | Hacker News Reader

Netflix Sues Yahoo CIO Mike Kail for Alleged Fraud

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81 pointscoloneltcb28 comments

It's sad if the allegations are proven to be true that he collected kickbacks by having a portion of the contract fees sent to his private LLC[1]. One of the weird thing about having a VP title on LinkedIn is that I seem to get random InMails from people who propose deals like this pretty regularly. It makes me wonder if it is rampant or there are just a lot of hopeful growth hackers out there who are promising kickbacks in order to get more business.

[1] Anyone know how you would report that on your taxes? Kickbacks from line 1 or something?

it happens all the time. multiple (larger) companies i've worked for have had these scandals come to light.

the shady LLC or sometimes offshore corporation just recognizes it as normal revenue.

worse yet, a lot of times the fleeced company sweeps it under the rug. the $X00,000-$X,000,000 that they they were screwed out of isn't worth the hit the stock price takes as the market judges the existing leadership for not catching it sooner. I personally know of a case where a VP did this with contractors to the tune of ~$1.5M at a mega-bank. Just got fired, no pressed charges, no civil suit. Too embarassing.

A better headline would probably be "Netflix Sues a Former Exec For Allegedly Collecting Kickbacks". His current job is not relevant to the suit.

It is relevant to the story as the suit could generate some significant collateral damage given his current position.

I would say it is certainly _far_ less relevant than the fact that he was a former employee.

Relevant to who/what? Netflix didn't write the article.

It depends who's perspective you're looking at. The article could have been titled "Yahoo's new CIO accused of accepting kickbacks at former employer".

Relevant to the company being defrauded perhaps.....?

This story is about Netflix suing a former employee who _happens_ to be working at Yahoo currently.

The story isn't for them though, they already know all about it.

Is the relevance to the readership that matters and Yahoo is still better known than Netflix in the general populace.

I agree with wmf.

I was pondering what he could have done? Resell Netflix or redistributed captured video from Netflix?

Nope... Nope...

Its about suing form employee, who is also the now cio of yahoo, defrauded netflix and took money from Netflix by taking cuts of deals aka "kickbacks" from vendors where netlfix paid to vedors $X but the guy took 15% of $x for himself through a IT firm he has/had(?) On the side.

It is pertinent to note he is CIO of yahoo as there would probably be repercussions to yahoo if he gets convicted, but leaving out he is a former employee and these fraudulent actions took place while he was employed by Netflix, not yahoo, at the time

> It is pertinent to note he is CIO of yahoo as there would probably be repercussions to yahoo if he gets convicted

They may even drop him before/even-if-not convicted. It's bad PR for Yahoo to say the least. (and it's unlikely that such a bold/public claim will end up being completely meritless)

> It is pertinent to note he is CIO of yahoo as there would probably be repercussions to yahoo if he gets convicted

People are not convicted in civil suits, but in criminal trials. "Found liable" would be more appropriate here; the distinction is somewhat significant because a criminal conviction has greater weight in future litigation, whereas a civil verdict is only particularly significant in future litigation between the same parties.

> His current job is not relevant to the suit.

They probably are bringing it up since it's twice now that a high profile Yahoo executive has been sued for fraud.

Yahoo! is a listed company, and their CIO potentially being a fraudster could move markets. It's a material event.

Given the nature of the crime (accepting kickbacks from IT vendors per sergers elsewhere in this subtread), there's every reason to wonder if he's continued doing this in his Yahoo CIO position.

If Yahoo has a clue you can be sure they'll be going over his actions at the company with a fine toothed comb.

Looks like the original article's title has been changed: now it says "sues former exec", which is a critical part of the story.

Mods, can you change the title accordingly?

I don't know exactly how much Netflix pays this guy, but if it was at least as much as Glassdoor claims we pay our directors, I really can't understand why he would risk that for an extra $300k.

I've noticed this is frequently the case for white collar frauds. I don't know if it's because they have so little regard for the law being applicable to them, or if they get a kick just from breaking it, or if we're all we are seeing is the tip of the iceberg (i.e. he's making $300k * 50 vendors), but it's frequently shocking how little profits were made on some crimes that have sent (b/m)illionaires to jail for a long time.

The briefings I received as part of certain government procedures related to information protection left one impression more than any other on me: narcissism and ego are two of the most important motivations a certain kind of person has for doing something. Every person in every espionage profile I saw in those briefings had one thing in common: the spies thought of themselves as better than, above, or otherwise separated in a superior way from their peers. They were smarter, more daring, had higher tolerances for thrills, whatever. Financial motivations were rarely relevant, and when they were relevant they were only tangentially so (e.g. acting as a catalyst to engage in even more risky behavior).

Perhaps a similar thing is at play here.

How about this guy from SAP who stole legos in an elaborate scheme involving fake barcode stickers: http://blog.sfgate.com/crime/2012/05/22/silicon-valley-exec-...

Because if you have no ethics, this is risk-free money. Make no mistake, the news here isn't that an exec (allegedly) defrauded his company, the real news is that the company is seeking legal action.

It's not risk-free, though -- this thing could end his career. It's a terrible, stupid, error in judgment involving taking a huge risk for frankly-not-a-lot-of-reward.

I wonder how Netflix discovered this. Was the new IT director going to end those contracts before receiving the same offer that his predecessor got from the vendor? If so, the smart thing for Netflix to do would be to try the same with all their vendors before going public with a lawsuit.

http://blogs.wsj.com/cio/2014/10/03/cloud-makes-netflixs-vp-...

Netflix wasn't planning to replace Kail, and there was no "new IT director."

Whatever they call the person who handles the IT contracts then.

I wonder how common this kind of thing is. It was definitely going on at a previous place I worked at.

So, at one point when I worked at Yahoo, there was an organization called, "SDS." Near as I ever could tell, there were consultants were were at Yahoo and also employees (double dipping in similar fashion) but that could have been my misinterpretation of things. There were a few people who were contractors, then employees of the company, and who's former company still had contractors working at Yahoo at the time. It's interesting to see this happen now, so many years since I've worked there.

tl;dr

   The Netflix suit says Kail, who joined the company in 2011, arranged Netflix 
   contracts with IT service companies Vistara and NetEnrich, and then pocketed 
   commissions of 12 percent to 15 percent of the monthly fees Netflix paid 
   each company.
   
   Netflix says it paid the two companies a total of $3.7 million from 2012 
   until Kail’s departure, which would mean he could have collected between 
   $450,000 and $560,000. The suit says he funneled the payments to “Unix 
   Mercenary,” a consulting company he controls. Netflix said Kail approved all 
   payments made to vendors.

if true, that's pretty damn shady. And stupid, frankly -- was $0.5m worth fucking your life up? I bet that's about his annual salary. I have to be honest: risking destroying my career, or jail time, for my annual salary isn't even a tiny temptation. You have to get up in the low millions before I need to think about it before saying no...

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