This past month, the world’s leading streaming platform, Netflix, was shoved into the limelight after a former Vice President was convicted of 28 counts of wire fraud, mail fraud, and money laundering by a federal jury. The former Netflix executive, Michael Kail, was convicted following a two-week federal trial and an indictment that began in 2018.
According to court documents, Kail abused his position as VP of IT Operations from 2011 to 2014; approving “millions of dollars in contracts for goods and services to be provided to Netflix” from small outside IT providers in exchange for over $500,000 and stock options from these companies.
A Department of Justice press release delineates that Kail had gone so far as to create an LLC, Unix Mercenary, in 2012. Acting as the sole signatory for Unix Mercenary, he was able to receive payments for several “advisory” positions outside of his employment with Netflix. These included “12% of the billings from Netenrich, Inc. to Netflix for its contract providing staffing and IT services to Netflix”; “15% of all billing payments that VistaraIT, LLC, a wholly owned company of Netenrich, received from Netflix”; and an “agreement with Platfora that provided him with the right to purchase up to 75,000 options, approximately .25% of the company” in exchange for internal Netflix information. Trial evidence showed that Kail illegally advised several other Silicon Valley companies including Maginatics, Inc.; ElasticBox, Inc.; Numerify, Inc.; and Sum Logic, Inc. during his time at Netflix.
Reaping the rewards of his bribery and kickback schemes, The Daily Mail reports that Kail used his profits to purchase a $2.6 million home in Los Gatos, CA which he is now required to forfeit following his conviction.
According to the DOJ, “Kail faces a maximum sentence of twenty years in prison and a fine of $250,000, or twice his gross gain or twice the gross loss to Netflix, whichever is greater, for each count of a wire or mail fraud conviction, and ten years in prison and a fine of $250,000 for each count of a money laundering conviction”.
To avoid precisely these kinds of conflicts of interest and greased palms with its employees, Netflix holds employees to a company-wide Code of Ethics and “Culture Deck”. These codes require Netflix employees to disclose any possible conflicts and to report gifts received from entities looking to do business with the company.
If a current or former employee of your organization is under investigation for wire fraud, money laundering or bribery, it is important to arm yourself with a talented legal defense attorney to ensure your company is not implicated in the case. Give us a call for a confidential consultation at 305-455-5206.
