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Former Netflix executive convicted of receiving bribes from contractors

justice.gov

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Re: Former Netflix executive convicted of receiving bribes from contractors

#171

Post by JumpCrisscross »

omarhaneef wrote: post #65

One item seems to have caused a lot of confusion in the comments so I will take a stab at clarifying: It is perfectly legal for Netflix to ask for options or any other consideration in exchange for the contract. Companies do this sort of thing frequently. They know that merely signing a large contract with a large firm will increase the value of the contractor. It is not legal for someone working for Netflix to ask f…

> It is not legal for someone working for Netflix to ask for shares in their own personal capacity as individuals

It can be, I think. If Netflix were properly informed of and signed off on the arrangement, it would just be an elaborate compensation mechanism. It would be a lot of paperwork. And they wouldn't approve that.

Re: Former Netflix executive convicted of receiving bribes from contractors

#172

Post by luckydata »

jshen wrote: post #22
luckydata wrote: post #13

Earlier quoted context omitted.

HR and rules are for the little people. VPs can do pretty much whatever they want for a LOOOONG time at large tech companies before any consequence catches up with them.

This isn’t true at the big company I’m at. I’ve seen several VPs fired in the 10 years I’ve been here.

That doesn't make anything I said less valid. You just experienced the losers of the internal game of thrones, the question is "fired why?" and "how long did it take?"

Re: Former Netflix executive convicted of receiving bribes from contractors

#173

Post by nkrisc »

LanceH wrote: post #151
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.

If there are no repercussions for paying a bribe, then the optimal play is to indiscriminately offer bribes to get what you want while taking on none of the criminal liability.

Re: Former Netflix executive convicted of receiving bribes from contractors

#174

Post by pmarreck »

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…

I have an easy breakdown:

If, in order for it to work, everyone up the chain from you (or next to you even) has to be unaware of it, it's probably wrong. If the other bidders on a business relationship have to be unaware of it, it's probably wrong. You're basically profiting off ignorance/deception.

I mean, even if you don't understand conflict of interest, this should at least ring a bell.

Candor and integrity should be fundamental values in all people. It's not like you can't conduct a profitable business or become very successful if you prioritize those attributes.

Re: Former Netflix executive convicted of receiving bribes from contractors

#175

Post by JumpCrisscross »

jnwatson wrote: post #142

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

> if the exec were a corporation, it would have been legal

No. It would not.

"Kail approved contracts to purchase IT products and services from smaller outside vendor companies and authorized their payment." This is a commonly outsourced function. If I hire a company to manage my IT procurement and learn they're getting undisclosed kickbacks, they'd be breaking the same laws Kail did.

Re: Former Netflix executive convicted of receiving bribes from contractors

#176

Post by Phillip98798 »

spoonjim wrote: post #89

And the Purdue execs will pay a fine. Victimize people, not corporations, if you want to go scot free.

Exactly. Seeing people here go to bat for a company like Netflix is eye-opening. It is way too easy to consolidate power as a major US corporation today.

Re: Former Netflix executive convicted of receiving bribes from contractors

#177

Post by invisible »

Someone else mentioned politics, but I think it's really apt to draw some lines since these are federal crimes.

Politicians and government agents will work toward getting legislation or contracts through and then "retire" to work privately for the same companies. This is probably not legal (i.e. bribery), but it's basically impossible to prove the crime. On a similar note, politicians can ask for contributions as part of lobbying efforts that go directly to their campaigns. That might not go right into their pocket (which somehow make it legal), but it certainly makes continuing their career easier.

I don't think either is particularly morally just, but the similarities are pretty stark. The government (and public) end up losing and becoming the victim just like Netflix was the victim of these actions.

Re: Former Netflix executive convicted of receiving bribes from contractors

#178

Post by [deleted] »

spenczar5 wrote: post #62
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…

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…

[deleted]

Re: Former Netflix executive convicted of receiving bribes from contractors

#179

Post by jacquesm »

cmeacham98 wrote: post #123
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).

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.

Not necessarily, see 'piercing the corporate veil'.

Re: Former Netflix executive convicted of receiving bribes from contractors

#180

Post by tootie »

spenczar5 wrote: post #62
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…

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 worked on the services side for many years and eventually worked my way into the sales and contract writing level of the operation. I was definitely too much of a square for anyone corrupt to want to pull me into their schemes, but I also never caught any kind of whiff of impropriety. We worked for a pretty wide array of clients including Fortune 50s and startups, contracts in the $500K-$20MM range. Never heard a whisper of kickbacks and we were typically squeezed to utilize every penny so it would be really, really hard to make more than 1% of our contract price disappear. The worst I ever saw was small-time expense abuse like buying steak dinners and wine on trips.

Second hand, an acquaintance worked on a tobacco account where they were spending government-mandated anti-smoking funds on a digital marketing campaign and they were asked to deliberate overbill and churn on work without delivering. People went to jail.

Third handed story because I knew some folks who used this software, a vendor once extracted about 1000% of their contract price in kickbacks building HR software for the city of new york: https://www.nytimes.com/2014/04/29/nyregion/three-men-senten...

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