SAN JOSE (CBS SF/BCN) – A federal judge sentenced a former Netflix executive to 30 months in prison Tuesday after he was convicted on several charges of fraud and money laundering back in April.
A jury convicted Michael Kail, the former Vice President of IT Operations at Netflix, on 28 charges of wire fraud, mail fraud and money laundering. The 52-year-old Los Gatos resident must also forfeit $700,000, pay a $50,000 fine, and serve a three term of supervision upon release from prison.
"Bribery and kickbacks are pernicious crimes that stifle Silicon Valley's culture of competitive innovation," said Acting United States Attorney Stephanie M. Hinds. "Michael Kail used his highly compensated Netflix position to siphon cash and valuable stock options from his tech vendors, the same vendors whose Netflix contracts he signed and whose technologies he pushed his teams to use. Such crimes come with a cost, as reflected by the prison sentence that Kail will now serve."
Kail began working as Netflix's Vice President in charge of IT Operations in 2011. The following year, Kail set up a company called Unix Mercenary, LLC that had no employees or address but a bank account connected to Kail. He then awarded a series of contracts worth millions to nine different IT companies, who repaid Kail with over $500,000 and stock options. Kail reportedly accepted so-called "commissions" of 12 to 15% on the contracts he approved.
After leaving Netflix in Aug. 2014, Kail went to work for Sunnyvale-based Yahoo as chief information officer. He left that job the following May in the wake of a civil lawsuit filed against him by Netflix in Santa Clara County Superior Court in November of that year. The two parties came to a confidential settlement the next year.
The federal government indicted Kail back in May of 2018 on nineteen counts of wire fraud, three counts of mail fraud, and seven counts of money laundering. He was convicted on April 20 of 2021 after a three-week trial.
United States District Judge Beth Labson Freeman sentenced Kail Tuesday and ordered him to surrender to the feds on March 8, 2022, to begin serving his 30-month prison sentence.
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