Following a two-and-a-half-week trial, Netflix’s former Vice President of IT Operations Michael Kail has been convicted of wire fraud, mail fraud and money laundering, by a federal jury in the US.
Kail was indicted on May 1, 2018, of nineteen counts of wire fraud, three counts of mail fraud and seven counts of money laundering.
The indictment also sought forfeiture of Kail’s Los Gatos residential property.
The jury returned a verdict of guilty on 28 of the 29 counts.
“Bribery undermines fair competition and innovation in any business arena, and particularly Silicon Valley’s highly competitive environment of cutting-edge innovation,” Stephanie M. Hinds, Acting US Attorney, said in a statement.
“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,” Hinds added.
The acting attorney also said that Netflix and other companies expect and deserve honest services from its employees.
According to the evidence presented at trial to the federal jury, Kail, 49, of Los Gatos, was employed at Netflix as the Vice President in charge of IT Operations from 2011 until July 2014.
Netflix prohibited conflicts of interest by its employees in its Code of Ethics and its “Culture Deck,” which required disclosure of actual or apparent conflicts of interest and reporting gifts from people or entities seeking to sell to the company.
As Netflix’s Vice President of IT Operations, Kail approved the contracts to purchase IT products and services from smaller outside vendor companies and authorized their payments.
The evidence demonstrated that Kail accepted bribes in kickbacks’ from nine tech companies providing products or services to Netflix.
In exchange, Kail approved millions of dollars in contracts for goods and services to be provided to Netflix.
Kail ultimately received over $500,000 and stock options from these outside companies. He used his kickback payments to pay personal expenses and to buy a home in Los Gatos, California in the name of a family trust.