A Northern District of California federal jury convicted a former Netflix executive last week of money laundering and bribery for accepting stock options, cash payments and gifts from third-party vendors in exchange for lucrative contracts with the streaming titan.
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After almost a week of deliberating, a jury unanimously found Michael Kail, former VP of internet technology at Netflix, guilty on 27 of 29 counts of fraud and money laundering after it was found he approved payments to several third-party vendors as compensation for various kickbacks between the years 2012 and 2014.
During the trial, jurors heard testimony from Kail’s former colleagues at Netflix, former Netflix Chief CFO David Wells, an FBI financial analyst and Kail’s former business partners who worked at startups that he advised.
Wells and his former associates told the jury that they were unaware Kail was receiving equity and hundreds of thousands of dollars in commissions, all while they were expressing concerns that some of the software products he was awarding contracts to weren’t sufficiently qualified to meet Netflix’s needs.
When Netflix’s then-CEO Reed Hastings confronted Kail about potential conflicts in 2014, Kail denied receiving benefits from third-party vendors and then quit Netflix “relatively quickly” thereafter, according to Wells’ testimony.
When on the stand, Kail testified that he was ‘very public” about his advisory roles with Netflix’s vendors and posted the positions on LinkedIn. He also said he believed his Netflix colleagues were aware he was receiving commissions or equity as an adviser, and he tried to put a “firewall” between his relationship as an adviser to the startups and his role at Netflix to avoid conflicts of interest.
Kail’s attorney, Julia Jayne of the Jayne Law Group, told Law360 on Friday that she and her client are disappointed by the outcome of the trial and that they intend to appeal the verdict.
“It goes to show that an innocent person can be convicted when there are so many counts stacked against them and there is a powerful corporation, Netflix, driving the investigation and prosecution,” Jayne said. “Mr. Kail was a tremendous asset to Netflix and helped drive their success as a cutting- edge technology company.”
“Not a single witness testified that Mike Kail harmed Netflix. To the contrary, every former and current Netflix employee testified that Mr. Kail was an incredible leader and made excellent business decisions,” she added. “Every single vendor testified that there was no quid pro quo and that they had to earn their contracts with Netflix.”
A sentencing hearing is scheduled for September 14.
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Source: https://www.law360.com/articles/1378923?sidebar=true
