Ex-Netflix Executive Convicted in Bribery-Kickback Scheme

A former Netflix Inc. executive was convicted of taking kickbacks from vendors in exchange for approving millions of dollars in contracts for products and services, federal prosecutors said.

A jury on Friday found Michael Kail, a former vice president of information technology operations, guilty of wire and mail fraud and money laundering after a two-week trial, according to a statement issued by the U.S. Attorney’s office in San Francisco.

“Bribery undermines fair competition and innovation in any business arena, and particularly Silicon Valley’s highly competitive environment of cutting-edge innovation,” Acting U.S. Attorney Stephanie M. Hinds said in the statement.

Kail used his influence at the company to rig its contracts with technology vendors “to unlock a stream of cash and stock kickbacks to himself,” Hinds said.

Kail’s lawyer, Julia Mezhinsky Jayne, said in a statement that he will appeal the “inexplicable” verdict, which she said is unsupported by evidence and driven by Netflix.

“It goes to show that an innocent person can be convicted when there are so many counts stacked against them and there is a powerful corporation, Netflix, driving the investigation and prosecution,” Jayne said.

Netflix had sued Kail in 2014 over the alleged kickback scheme, claiming he hid the payments by having them paid to his personal consulting company Unix Mercenary LLC.

Kail’s “advisory agreements” were and continue to be legitimate, Jayne said. Every former and current Netflix employee testified Kail was an “incredible leader” who made excellent business decisions, she said. “Every single vendor testified that there was no quid pro quo and that they had to earn their contracts with Netflix.”

A vice president at Netflix from 2011 to 2014, Kail, 49, accepted bribes of more than $500,000 and stock options from nine tech companies providing products or services to Netflix, according to the statement.

Prosecutors sought to have Kail to forfeit his home in Los Gatos, about 50 miles south of San Francisco, as well as other real estate jurors convicted him of buying with laundered money.

Netflix declined to comment.

The case is U.S. v. Kail, 18-0172, U.S. District Court, Northern District of California (San Jose).

©2021 Bloomberg L.P.

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