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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

#351

Post by ec109685 »

dang wrote: post #146
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…

We've changed the URL to that from https://www.businessofbusiness.com/articles/why-a-former-net... . Thanks!

We've already had a thread on the original conviction when this first came out. This business insider article at least added some new angles about how there are degrees of this happening throughout the industry.

Re: Former Netflix executive convicted of receiving bribes from contractors

#352

Post by trhway »

> Kail then urged his Netflix employees to find a use for the product, despite their objections and preference for a competing product that Netflix was already paying for.

There should be a special aggravating attachment for such abuse of employees :)

Re: Former Netflix executive convicted of receiving bribes from contractors

#353

Post by tweedledee »

jollybean wrote: post #340
tweedledee wrote: post #29

This is so common it’s hard not to do. Not doing it definitely stunted my startup but it’s a lifestyle company and I don’t mind building slower. Edit: I should add that while I was working at a FAANG (before doing a startup) the team I was on would constantly be blocked from building X only for a VP to buy a company that said they did X but didn’t. Because we still needed X we would buy a new company each year. We co…

M&A stupidity is not the same as fraud though. M&A is hard. It's not unreasonable for execs to tell the team not to do X because they're buying it, and then to screw it up. It's also normal for companies to want to buy via a dealer because they don't want to deal with your little startups legal issues, compliance, regulatory, billing. They just want to deal with small tier of vendors. In fact, that's kind of a startu…

I'm privy to more details than I am giving out. I've been in SV for over 15 years and I have seen a lot in that time. I'm aware of what is normal. There is normal purchasing intermediaries and then there are purpose built bribe vehicles. We're not talking 10% it's more like 100% to 1000%.

Re: Former Netflix executive convicted of receiving bribes from contractors

#354

Post by Phillip98798 »

bogwog wrote: post #312
Phillip98798 wrote: post #231

Earlier quoted context omitted.

I hear that. I just wonder what exactly it is we're accomplishing here in terms of justice. More corporate compliance and fear? Where is the line going to be drawn? Hyperbolic perhaps, but what's to stop the law from going after salaried people with side projects? Oh, you visited the stackoverflow career page during your 9-5? That's fraud. I'm exaggerating, but the precedent is there. Cases like this can create a sli…

> Oh, you visited the stackoverflow career page during your 9-5? That's fraud. I'm exaggerating So you're saying that what this guy did isn't clearly fraud? I don't see how you could say that, unless you misunderstood the situation. It is, very clearly, 100% fraud. In addition to the money Netflix was paying him as part of his salary, he was also secretly taking a cut of the money flowing to contractors. It's like wh…

Outside SV, I have friends in manufacturing. They tell me stories like this all the time. They have to get this executive on their side to win this deal or that deal. I wouldn't dare try to defend the morality of it, but this is capitalism right? I personally believe the corrupt officials example you bring up is much worse than this though. One is often a life and death situation and the other is about protecting the interests of a successful multi-billion dollar corporation.

Re: Former Netflix executive convicted of receiving bribes from contractors

#357

Post by tptacek »

ec109685 wrote: post #351
dang wrote: post #146

Earlier quoted context omitted.

We've changed the URL to that from https://www.businessofbusiness.com/articles/why-a-former-net... . Thanks!

We've already had a thread on the original conviction when this first came out. This business insider article at least added some new angles about how there are degrees of this happening throughout the industry.

The DOJ says the same thing. It's why they're pushing for a harsh sentence in this case.

Re: Former Netflix executive convicted of receiving bribes from contractors

#358

Post by ncallaway »

tomp wrote: post #61
tptacek wrote: post #8

Earlier quoted context omitted.

The article describes an absolutely standard kickback scheme. If you're an employee of a company and arrange to take kickbacks from vendors without the approval of your employer, you're defrauding your employer.

But the article doesn't say that he was taking "kickbacks", but that he was hired as a "consultant". Is that illegal? "We'd like to do business with Netflix, hmmm whom should we hire as a consultant, maybe someone at Netflix, surely knows a lot about the kinds of companies that do business with Netflix." Edit: I agree it's immoral just like how FDA leaders approving drugs then getting hired by the drug industry is im…

If they're hiring as a consultant the procurement officer at Netflix that decides to grant them the contract (and Netflix doesn't know about/approve this arrangement), that seems _very_ transparently to be a kickback to me.

> it's hard to prove that what they did was illegal.

Sure, it's a lot of work. That's why we spend money on prosecutors. But they literally _just_ proved that in a way that convinced 12 people "beyond a reasonable doubt", so it's certainly not impossible.

It just seems weird to be asking: "is the described scheme illegal?" in an article describing a conviction for the described behavior, unless you're questioning the validity of the judicial process in this case (which itself is a fine thing to do)

Re: Former Netflix executive convicted of receiving bribes from contractors

#359

Post by xyzzyz »

Phillip98798 wrote: post #262
xyzzyz wrote: post #240

Earlier quoted context omitted.

This guy defrauded the company to the tune of millions of dollars. I am perfectly comfortable with big corporations and governments muscling people into compliance, where thing to comply with is “not stealing from the company”. Imagine you run a business, and your employee just steals one of the company vehicles. Do you think you should have any recourse beyond firing them? I mean, it’s only a few tens of thousands o…

I think that's a bit of a false equivalency. The guy incorporated a domestic LLC, which unless he's a total moron, I assume the guy just thought that this is how business is conducted, and the US government would be okay to know about it. I don't believe any small business employee is going to incorporate an "I Steal Trucks LLC." The American public gets defrauded by corporations daily. I seldom see white knights in…

His LLC had nothing to do with how they caught his fraud, or his culpability. I don’t get the point you’re trying to get across with “I Steal Trucks LLC”.

> The American public gets defrauded by corporations daily. I seldom see white knights in the government volunteering to prosecute them on our behalf.

Then you are not paying attention.

Re: Former Netflix executive convicted of receiving bribes from contractors

#360

Post by rexreed »

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.

Hold up -- Angel investors give you money in exchange for equity. That's usually how it works. Are you saying that instead of giving money, these angel "investors" are executives a major companies who are trading customer deals at the company they work for in exchange for personal equity? Or are you just saying that they invest their money and provide connections in addition to their money?

In the primary situation, they are benefiting by getting stock in exchange for giving their company's business to the startup (illegal kickback). In the second situation, they're referring companies they have a personal financial interest in for business to enhance the value of their investment (conflict of interest).

Need more specifics.

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