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Former Netflix executive convicted of receiving bribes from contractors

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Re: Former Netflix executive convicted of receiving bribes from contractors

#121

Post by tweedledee »

csmythe15 wrote: post #72
cabcabcab wrote: post #48

Earlier quoted context omitted.

This is super common in the Valley. This isn't the exception it's the norm. Every single angel investor I have ever pitched asked for/suggested this. If this is illegal 99% of the Valley is committing fraud.

That's more of what I'm looking to substantiate...thank you.

There is also the role of the VCs who facilitate much of this. They use VPs in big companies to offload crappy purpose built startups for huge profits then get their friends to offer the VP sweetheart deals and or future employment. AFAIK the arms-length / chinese walls keep it legal in appearance. Basically any big tech company with lots of money and terrible management is prone to this.

Re: Former Netflix executive convicted of receiving bribes from contractors

#123

Post by cmeacham98 »

nilsbunger wrote: post #94
spenczar5 wrote: post #62

Earlier quoted context omitted.

Thanks, this is indeed a better source. A lot of people here are saying this is incredibly common which is frankly pretty surprising to me. Does it really happen through shell LLCs? I am definitely aware of execs prioritizing startups they've invested in, which is... not a great look. But this seems to be a different thing. Kail wasn't an investor. He explicitly drafted agreements that paid him a fraction of the mone…

People often set up an LLC for their consulting thinking it will help with 1) taxes and 2) liability. But neither of those are quite right: 1) the same tax deductions are available on your normal schedule C 2) while acting on behalf of your LLC you’re still personally liable for your actions (let alone your illegal schemes).

From my understanding, an LLC does help with _financial_ liability - if the company fails and goes bankrupt, your personal assets generally won't be on the line.

Obviously, an LLC cannot shield you from criminal liability.

Re: Former Netflix executive convicted of receiving bribes from contractors

#124

Post by rsyring »

nilsbunger wrote: post #94
spenczar5 wrote: post #62

Earlier quoted context omitted.

Thanks, this is indeed a better source. A lot of people here are saying this is incredibly common which is frankly pretty surprising to me. Does it really happen through shell LLCs? I am definitely aware of execs prioritizing startups they've invested in, which is... not a great look. But this seems to be a different thing. Kail wasn't an investor. He explicitly drafted agreements that paid him a fraction of the mone…

People often set up an LLC for their consulting thinking it will help with 1) taxes and 2) liability. But neither of those are quite right: 1) the same tax deductions are available on your normal schedule C 2) while acting on behalf of your LLC you’re still personally liable for your actions (let alone your illegal schemes).

Subchapter S corporations or LLCs facilitate paying yourself distributions, which are exempt from Medicare and Social Security taxes, saving you an initial 15%. Although, there are details and caveats to be aware of. I don't know of any way to get that benefit without a corporation.

Re: Former Netflix executive convicted of receiving bribes from contractors

#125

Post by dralley »

handrous wrote: post #96
numbsafari wrote: post #44

Earlier quoted context omitted.

The amount of "I don't get why this is wrong?" going on in this thread would seem to support the prosecutors' view that this is a widespread practice. Long ago, before Dotcom went Dotbomb, I worked for a firm where the CIO was being paid kickbacks by our hardware reseller. He was terminated for other reasons and, shortly after he left, our head of network ops got a call from the distributor asking where they should s…

> The amount of "I don't get why this is wrong?" going on in this thread would seem to support the prosecutors' view that this is a widespread practice. I think it's because a lot of "hustle" culture and stories of the early business careers of very successful founders involve a bunch of stuff that sure looks like fraud or otherwise like something that ought to be illegal (it may not be, but I mean that it feels like…

https://www.bloomberg.com/opinion/articles/2021-08-31/theran...

Re: Former Netflix executive convicted of receiving bribes from contractors

#126

Post by Kranar »

numbsafari wrote: post #44
csmythe15 wrote: post #2

Hey, I'm the author of the article -- just wanted to point out that what made this story interesting to me is the implication that this kind of conduct could be very widespread. Prosecutors definitely hinted at that. If anyone knows of any similar stories, I'd be very interested in hearing them. christie.smythe@businessofbusiness.com

The amount of "I don't get why this is wrong?" going on in this thread would seem to support the prosecutors' view that this is a widespread practice. Long ago, before Dotcom went Dotbomb, I worked for a firm where the CIO was being paid kickbacks by our hardware reseller. He was terminated for other reasons and, shortly after he left, our head of network ops got a call from the distributor asking where they should s…

Yes, your description is clear and I can see why it's illegal and immoral, but the article is very vague on what's illegal or wrong about it.

The key distinction that you outline is that the CIO did something behind the company's back that the company would almost certainly not have approved of. The CIO defrauded their own company by taking kickbacks in exchange for purchasing agreements; most people can see that as being wrong.

As I'm reading this article with no familiarity or background knowledge, I did not presume that this exec, Kail, was doing something that Netflix would not have approved of and using his position for his own benefit and to defraud Netflix.

If Netflix had been okay with Kail becoming a consultant or partner of the startups that Netflix entered into an arrangement with, then there would be no issue.

Anyways, this article is written as if the reader already knows what happened and what's going on, which is fine but it shouldn't be titled "Why a former Netflix exec is facing ..." It should have instead been titled "Former head of IT Operations who defrauded Netflix will face 7 years in jail."

Re: Former Netflix executive convicted of receiving bribes from contractors

#127

Post by simonh »

cabcabcab wrote: post #48
csmythe15 wrote: post #2

Hey, I'm the author of the article -- just wanted to point out that what made this story interesting to me is the implication that this kind of conduct could be very widespread. Prosecutors definitely hinted at that. If anyone knows of any similar stories, I'd be very interested in hearing them. christie.smythe@businessofbusiness.com

This is super common in the Valley. This isn't the exception it's the norm. Every single angel investor I have ever pitched asked for/suggested this. If this is illegal 99% of the Valley is committing fraud.

I think what you're describing is an investor in two companies setting up deals between those companies. There is nothing wrong with that because the investor is in the role of a part owner in both cases. They're not an employee of either company. But I'm guessing, it's not clear to me exactly what kinds of arrangements you're referring to.

Re: Former Netflix executive convicted of receiving bribes from contractors

#128

Post by nitrogen »

nindalf wrote: post #110
ksdale wrote: post #64

Earlier quoted context omitted.

When I was in law school, I felt patronized by the amount of time we spent talking about conflicts of interest because it seemed so obvious to me. In retrospect, having read so many of the disbarment announcements in the bar association newsletter, it's clear that a great many people do not understand what a conflict of interest is.

I feel patronised by yearly mandatory training. All of it seems obvious and not relevant to me because I’ve never negotiated a contract on behalf of my employer. Still, good to know there’s plenty of people who might find training useful.

It's also for everyone not involved to notice something is wrong if they overhear a contract-related conversation that mentions kickbacks.

Re: Former Netflix executive convicted of receiving bribes from contractors

#129

Post by groby_b »

poizan42 wrote: post #101
groby_b wrote: post #24

Earlier quoted context omitted.

"I will only sign this contract on behalf of my company if you give money to me personally" is not in any way ambiguous in terms of morality. If you don't understand why that's wrong, I strongly suggest maybe taking a few philosophy or ethics classes. In short: He was supposed to be acting on behalf of his employer - that's what being an exec means. He instead used the resources of his employer (not his to use, excep…

I don't think anybody is confused about the morality of "I will only sign this contract on behalf of my company if you give money to me personally". The problem is that this is never mentioned in the article. In fact at no point does the article say that the agreement was with the VP and not okayed by the decision makers at Netflix. It seems pretty clear to me why people are confused.

It is right in the subhed?

"Michael Kail will be sentenced Oct. 19 in San Jose for taking stock, cash and gifts from tech firms trying to do business with the streaming service."

If nothing else, the "gifts" part makes it clear its personal.

Re: Former Netflix executive convicted of receiving bribes from contractors

#130

Post by radicaldreamer »

whymauri wrote: post #12

>In his own memorandum to the court, requesting that he be sentenced to a year of house arrest, Kail, 49, described himself as a “global power leader, top dev ops influencer and a thought leader.” So very humble of him.

"I'd like the maximum sentence please"
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