Former Netflix executive convicted of receiving bribes from contractors • Hacker News Board

Re: Former Netflix executive convicted of receiving bribes from contractors

#151

Post by LanceH » Tue, Oct 19, 2021, 4:58 PM UTC

tptacek wrote: post #43

The DOJ press release is clearer than this article is: https://www.justice.gov/usao-ndca/pr/former-netflix-executiv... Some fun details: Kail did his criming through a shell LLC he set up called "Unix Mercenary". He took between 10-15% of the total billings for each of the companies he hooked up with this scheme. None of those companies were charged (more's the pity). They got him on mail fraud, wire fraud, honest se…

> one of those companies were charged (more's the pity).

I understand the sentiment that "it takes two", but I'm of the opinion that it's the one accepting bribes that is the root cause of the problem.

It is the people accepting bribes who are taking from their company, university, or government and creating a pay to play market.

Re: Former Netflix executive convicted of receiving bribes from contractors

#152

Post by sokoloff » Tue, Oct 19, 2021, 4:58 PM UTC

rsyring wrote: post #124

nilsbunger wrote: post #94

Earlier quoted context omitted.

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.

Social Security stops at something under $150K per year.

If you’re going to try to avoid it by paying no salary and all distributions for work that you personally did, you’ll likely fall afoul of the “reasonable salary” test, designed to prevent exactly this.

Re: Former Netflix executive convicted of receiving bribes from contractors

#153

Post by vkou » Tue, Oct 19, 2021, 5:01 PM UTC

anonymous4828 wrote: post #5

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

Doesn't this sort of thing happen in government all the time?

Yes, but no, but yes.

1. It's incredibly illegal for an agent of the government to do this, and people get fired and prosecuted for this.

2. It is possible to couch this in a revolving-door sort of arrangement - once the agent stops working for the government, they get a cushy job at the vendor. In theory, the vendor has no reason to hold up their end of the bargain, once the person they are bribing is out of office. In practice, that person can then leverage their government connections to smooth out future business deals... Which in itself is not illegal, and is convenient cover for the job.

Re: Former Netflix executive convicted of receiving bribes from contractors

#154

Post by iammisc » Tue, Oct 19, 2021, 5:02 PM UTC

ksdale wrote: post #75

iammisc wrote: post #39

So after reading the article, I'm still not sure of the crime, or the motivations (from netflix's perspective at least). Can someone help me?

He worked for Netflix, he was responsible for finding a vendor, and he basically chose a vendor based on who would pay him, personally, to let them be the vendor for Netflix. He didn't choose based on who would be the best vendor for Netflix, even though that's what Netflix was paying him to do. Netflix presumably would not have wanted him to do this if they had known what he was doing.

Oh I see... so this is just bribery. And 'Netflix' the organization didn't know basically.

Re: Former Netflix executive convicted of receiving bribes from contractors

#155

Post by 1B05H1N » Tue, Oct 19, 2021, 5:02 PM UTC

tptacek wrote: post #43

The DOJ press release is clearer than this article is: https://www.justice.gov/usao-ndca/pr/former-netflix-executiv... Some fun details: Kail did his criming through a shell LLC he set up called "Unix Mercenary". He took between 10-15% of the total billings for each of the companies he hooked up with this scheme. None of those companies were charged (more's the pity). They got him on mail fraud, wire fraud, honest se…

Kail ultimately received over $500,000 and stock options from these outside companies

All this for 500k? Seems like a lot of trouble for the equivalent of a year as a C-Level.

Re: Former Netflix executive convicted of receiving bribes from contractors

#156

Post by ugwigr » Tue, Oct 19, 2021, 5:02 PM UTC

the HN admin changed the link I posted. this is unethical - You are fundamentally changing what I posted. As a product manager here is a better solution - A.) Add a clear indicator that admin changed the link to redirect B.) Delete my link and post yours.

Shawdow changing what users post is wrong.

Re: Former Netflix executive convicted of receiving bribes from contractors

#157

Post by vkou » Tue, Oct 19, 2021, 5:04 PM UTC

Phillip98798 wrote: post #149

ludocode wrote: post #140

Earlier quoted context omitted.

I absolutely believe he should go to prison. If a fine is the only punishment for a crime, then that law only exists for the lower classes. The only way to punish a rich person and deter other rich people from crime is to take away their freedom.

Aren't there better targets to make a point with though? Military contractors, oil companies? We're talking about billions of dollars in bribes. Do you think this case will even put a dent in that corruption? This is not a lot of money and as the popularity of this thread insinuates, this is how things have always been. There is no Silicon Valley without these types of deals unfortunately.

The best target to make an example of is the one you caught.

Re: Former Netflix executive convicted of receiving bribes from contractors

#158

Post by elliekelly » Tue, Oct 19, 2021, 5:06 PM UTC

jnwatson wrote: post #142

The weird aspect of the whole thing is that if the exec were a corporation, it would have been legal.

Well you can’t exactly defraud yourself, can you?

Re: Former Netflix executive convicted of receiving bribes from contractors

#159

Post by computermagic » Tue, Oct 19, 2021, 5:07 PM UTC

jnwatson wrote: post #142

The weird aspect of the whole thing is that if the exec were a corporation, it would have been legal.

This was exactly what I was thinking. Shouldn't the real point to this be we need to make this illegal across the board. It doesn't seem like it would have suddenly made more sense if Netflix got the kickback.

Re: Former Netflix executive convicted of receiving bribes from contractors

#160

Post by numair » Tue, Oct 19, 2021, 5:08 PM UTC

tptacek wrote: post #91

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…

I think it's probably pretty common, because I've worked jobs where clients have floated the idea (it was gross, we turned them down). Kail's own sentencing memorandum points out that OpenDNS rewarded a different Netflix employee with stock options. Also, presumably, super illegal.

I can’t find the OpenDNS citation — could you post a link? I would be super disappointed to find out that the founder of OpenDNS was involved in this sort of behavior.