A federal jury has convicted a former Netflix executive on charges that he rigged agreements with smaller companies so that they would make kickbacks to him when they received payments from Netflix for new products and services.
Michael Kail, 49, of Los Gatos, who led Netflix’s information technology operations from 2011 to 2014, created and controlled a company called Unix Mercenary LLC, which had no employees or location, for the purpose of receiving more than $500,000 plus stock options from nine companies, according to statement released Friday by the United States Attorney’s Office in San Jose.
Kail led other Netflix employees to believe that the arrangements Netflix had with these companies did not involve payments and that Netflix was testing software pilots without paying for them, which was normal, according to the statement.
“Not only did Mr. Kail deprive Netflix of its money and resources by abusing his position as VP of IT Operations, he created a pay-to-play environment whereby he stole the opportunity to work with an industry pioneer from honest, hardworking Silicon Valley companies,” said FBI Special Agent in Charge Craig D. Fair.
Kail is to be sentenced in about three months. He could receive a sentence of 20 years in prison and hundreds of thousands of dollars in fines, according to the statement, which also said Kail will remain free on bond until his sentencing.
The case is U.S. v. Michael Kail, 18-0172 BLF.