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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

#341

This is so incredibly common and is actually taught as tactic at many accelerators. You can form "customer advisory boards" which basically pay small percentages of common to early users to use the product. Like, seriously, more than half of the companies funded by YC do this. I think this is the norm more than the outlier.

No, you misunderstand. If the stock and advisory role were given to Netflix as part of the deal, it would have been fine. That's not what happened here. The benefits went to the executive directly. He asked for personal bribes to sign contracts on behalf of Netflix. He enriched himself at the expense of his employer. This is illegal.

It's the individual advisor, not the company, that gets the fee.

The company would generally have no interest in that kind of setup.

When the advisory board is public, it appears to be 'above board' even though it might be a conflict of interest at least it's hiding in plain sight.

Re: Former Netflix executive convicted of receiving bribes from contractors

#342
post #22

Earlier quoted context omitted.

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?"

For inappropriate behavior, and fired very quickly

Re: Former Netflix executive convicted of receiving bribes from contractors

#343

Earlier quoted context omitted.

There is less political corruption in the US than people think. Everything is so scrutinized these days, especially compared to the rest of the world. White House Chief of Staff John H. Sununu's travel expenses scandal was a big deal at the time, and this was in 1992 (before social media) and the amount of $ was pretty small. I think insider trading is possible concern though, although that too has gotten considerabl…

I know it's a complicated topic, but lobbying can be considered as corruption. E.g. a group with socioeconomic power is corrupting a law in order to serve their own interests. And US is very well known for its lobbying that people are trying to limit.

Lobbying does not imply that the politician is receiving any benefit, in fact, there's a lot of rules in place for that.

So, the disproportionate power that corps. may have is an issue of equality, but that's not this kind of corruption, at least not directly.

Re: Former Netflix executive convicted of receiving bribes from contractors

#344
post #336

Does anyone know how the actual conversation for something like this goes? I just can't imagine having the chutzpah to ask for a bribe. Is there some kind of euphemistic lingo people use to make it clear they want a bribe without saying the words?

First, to demand a bribe only happens when you are in a position of authority to grant what someone wants, and then you offer them some terms to get what they want in an easier way via a side-payment.

So the person being bribed is (usually) not stealing from the person paying the bribe. They are stealing from whoever put them in that position of trust.

So for a company, they are ripping off the shareholders if they choose a vendor not based on how competitive the vendor is, but based on a side payment. The person paying the bribe receives a benefit.

But things get tricky when the bribe-taker is employed by the government and the bribe-payer is also a taxpayer. But still, if you want the ticket to be waived or the construction plan approved, you're happy to pay the bribe.

For example in communist countries healthcare was terrible, but if you could pay a bribe, then your loved one would get better treatment -- for example their beds would be cleaned more regularly. The doctor would pay more attention to them, etc. So the family of the loved ones would be the ones to approach the doctors with incentives, hoping this would be enough to get better treatment.

That's one extreme example. Here in capitalist Miami, we went to the beach and a local hotel had beach chairs and umbrellas that could be rented by the day. It was free for guests of the hotel, but $60 for someone not in the hotel. But we were told that if we paid the guy in cash, for merely $40 we could get the chair and umbrella for the day. Just a small little side-payment to help grease the wheels. We wanted the chair, and could save $20. It was the Hotel that lost out on $60. But long term, what happens is that the Hotel sees there is a long line of people wanting to hand out beach chairs, and the salaries for those adjust down, and perhaps some money needs to change hands with whoever appoints the umbrella dispenser. Then later on, some money might change hands to get to be person who appoints the person that dispenses the umbrellas. So over time, those economic rents dissipate as people realize "hey, I am a gatekeeper to something valuable, I can take a cut for myself." That process continues until there is no surplus value left that anyone is in charge of dispensing. That means small side-payments are made everywhere, from dealing with the police to getting a decent room in a hotel, to a table in a restaurant and eventually to even getting some meat from the butcher.

In such a society, it's basically impossible to be honest, even if you wanted to, because the endemic bribery is a stable equilibrium.

People have no idea how lucky they are to live in a society that values law and order, and how impossible it is to reform the corrupt society once corruption sets in and becomes expected as opposed to newsworthy.

These casuals dismissals and mocking of people who have an innate desire to follow rules and act with integrity is really foolish once you consider people die trying to enter law-abiding societies, as it's really hard for most people to have opportunities in life when everything is dominanted by side-payments or political dealmaking rather than who can provide the best service for the lowest price.

Re: Former Netflix executive convicted of receiving bribes from contractors

#345
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.

Those stock options could be worth millions, one of the companies he received xx,xxx options for was acquired by mega corp I think was mentioned for example. This is on top of the money he brazenly funneled into his sham LLCs

Re: Former Netflix executive convicted of receiving bribes from contractors

#346

Earlier quoted context omitted.

this seems like such a low reward high risk grift. A Netflix exec needs to risk his entire life over $450K?

The DOJ adds up Kail's gains into the mid 7 figures, inclusive of the stock grants he was given by the companies he shook down.

Correct they gave an example xx,xxx stock options for a company that got acquired by mega corp could easily translate into millions.

Re: Former Netflix executive convicted of receiving bribes from contractors

#347
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…

> A lot of people here are saying this is incredibly common which is frankly pretty surprising to me.

As an intern at one place I had to spend hours studying and then taking a test to ensure I complied with anti-bribery rules. I’m sure this didn’t just come up because one person did something bad.

Re: Former Netflix executive convicted of receiving bribes from contractors

#348
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…

That's amazing. Kail was a star in Netflix. He got promoted to VP only a few months after he joined Netflix as a director. I don't get what the point is of committing such crimes.

How do you prove your value to get promoted like this after a measly few months on the job? Play golf with the CEO? I’m seriously wage slaving to make senior leadership at my org Rich, just for the promise of not being fired and not being promoted.

Re: Former Netflix executive convicted of receiving bribes from contractors

#349

Earlier quoted context omitted.

Heh, yea. Good observation. This reminds me of the ridesharing debacle. Uber was operating an illegal taxi service which upset a lot of local governments. It was taken to the courts multiple times. Uber won but one of the lessons to young founders was to go for it even if it's not strictly legal - laws can change. Now I'm not saying what Uber did was necessarily a bad thing. But if I had the idea to disrupt taxi serv…

YouTube got huge largely due to rampant piracy, in the early days. Straight-up posting copyrighted material unmodified, and all kinds of use of media (songs, especially) in ways that aren't protected by fair use. All while copyright cartels were going after torrent users—YouTube? Made a bunch of people rich, none of them paid for what they knowingly did, and no-one thinks 1/10 as ill of any of them as they do of this…

Copyright and taxi-medallion laws are grossly immoral examples of regulatory capture that impoverish and endanger the public in order to provide a much smaller benefit to a small number of "exploiters." YouTube, BitTorrent, and Uber Cab were able to improve this situation, making them very popular despite greatly angering the exploiters. Similarly for, say, marijuana sellers. Doing illegal things that are nevertheless ethically upright and very popular may pay off for a business, as it did in those cases. Or it may not.

It's less likely to pay off when the illegal things are instead unethical, unpopular, and harmful to the public, at least if you get caught—and when they involve betraying the people closest to you, you're probably going to get caught.

Re: Former Netflix executive convicted of receiving bribes from contractors

#350

Earlier quoted context omitted.

Yeah, that's fair (yeah you can also deduct health care premiums on Schedule C). I think the liability shield is really important though, and if you're not wild about the S corp administrative overhead you can choose to be taxed as a sole proprietor.

An LLC doesn't help you against your own actions though: "forming an LLC will not protect you against personal liability for your own negligence, malpractice, or other personal wrongdoing that you commit related to your business" from https://www.nolo.com/legal-encyclopedia/limited-liability-pr... My understanding is it won't help you if you're just consulting by yourself, because everything is your own action.

Yeah I mean, if you commit negligence or malpractice (which are serious, not like the client didn't like your work) you're liable, so you need insurance. And you can still go to jail for actual crimes. But the creditor/bankruptcy liability is nice and basically free.
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