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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

#51

Post by cabcabcab »

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…

Every single early stage company I know does this.

Re: Former Netflix executive convicted of receiving bribes from contractors

#52

Post by jcims »

mytailorisrich wrote: post #34
joshstrange wrote: post #11

> There was just one catch to landing that deal: It had to hire the streaming company’s vice president of IT operations, Michael Kail, as a consultant and an advisor, and pay him with fees and stock options. I completely get how a startup would take this deal, however gross it is, but what I don't understand is how the exec got away with it from Netflix's side. And the fact this wasn't just 1 but 8 other startups he…

That's the key question. In all the companies I worked for in the last 20 years he would have been fired instantly.

How would it be detected?

Re: Former Netflix executive convicted of receiving bribes from contractors

#53

Post by dboreham »

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 think some people may be confused because in the case the the dude was some biz dev type, involved with Netflix _investing_ in the startup, then this arrangement (him being on their board, an advisor, have stock) is quite common. The difference is that here he was the IT director, and Netflix was a customer not an investor, and the arrangement wasn't disclosed.

Re: Former Netflix executive convicted of receiving bribes from contractors

#54

Post by barney54 »

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?

In the U.S. government. It happens some, but it totally illegal. It’s hard to get fired working for the U.S. government and this is one of the few ways you can get fired.

Re: Former Netflix executive convicted of receiving bribes from contractors

#55

Post by prasadjoglekar »

kcsavvy wrote: post #26

I have heard of many startups bringing early customers onto their advisory board - it seems like a relatively common practice. I am curious what makes this fraud? The timing? Or the fact that the Netflix VP did not disclose this to His employer?

Kali didn't go on to the advisory board on behalf of Netflix - that would be perfectly rational.

Instead, the startup had to do 2 deals: One with Kali directly for "advice", and then a second with Netflix that Kali, in his capacity as a VP there, would sign.

Besides being unethical; this is now a clear conflict of interest. Netflix (and shareholders of Netflix by extension) may have signed up for a crappy product from the startup only because startup had a side deal with Kali.

Re: Former Netflix executive convicted of receiving bribes from contractors

#56

Post by rkalla »

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.

He also has a church and is a life coach on Only Fans... you know, real classy person. :smh-forever:

Re: Former Netflix executive convicted of receiving bribes from contractors

#57

Post by paulpauper »

The shady-sounding plot was described by the government during a criminal trial earlier this year in San Jose federal court. Kail was found guilty of more than two dozen fraud and money laundering counts. At his sentencing Oct. 19, prosecutors will ask that he get a stiff punishment of seven years in prison as well as be ordered to pay fines, restitution, and forfeit a $3.3 million home in Los Gatos, California.

That seems pretty stiff. goes to show how while collar crimes are not punished more leniently and how being rich does not shield one from justice, hardly.

Re: Former Netflix executive convicted of receiving bribes from contractors

#59

Post by tedivm »

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.

There's a huge difference between angel investors taking a share of the company and acting as an advisor and what happened here.

When you talk to these angel investors, do they offer you contracts for your new company at their existing companies? Like if you sell product X as part of your new company, are they saying they'll make sure the companies they're involved with buy product X if you give them shares of the company and cash kickbacks? If not then your comparison doesn't hold.

Re: Former Netflix executive convicted of receiving bribes from contractors

#60

Post by ghaff »

spenczar5 wrote: post #49
ghaff wrote: post #32

Earlier quoted context omitted.

I can't imagine any BoD would be cool with an executive responsible for signing deals getting essentially paid for signing those deals given what a clear conflict of interest that would be. And the BoD itself would probably be found to be failing their fiduciary responsibility under those circumstances.

I could imagine some slippier cases. A lot of successful startup executives have a bunch of money and invest it in startups. They (of course) pick ones that they think will do a good job in their space. It isn't that crazy to imagine them recommending using a startup they've invested in, and it's also possible to imagine them making a convincing case to a board that the startup is the best option available. They stil…

I don't really disagree. Just because there's a potential conflict of interest doesn't mean there's corruption. And the further you get from large companies with internal audit teams and established procurement practices the fewer controls there are the murkier things can get.

Per the peer comment, if you don't disclose the conflict, and let the BoD decide what to do in light of that conflict, then you're into the realm of looking like you're hiding something.

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