
Netflix Sues Yahoo CIO Mike Kail for Alleged Fraud - coloneltcb
http://recode.net/2014/11/25/netflix-sues-a-former-exec-now-yahoos-cio-for-allegedly-collecting-kickbacks/
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ChuckMcM
It's sad if the allegations are proven to be true that he collected kickbacks
by having a portion of the contract fees sent to his private LLC[1]. One of
the weird thing about having a VP title on LinkedIn is that I seem to get
random InMails from people who propose deals like this pretty regularly. It
makes me wonder if it is rampant or there are just a lot of hopeful growth
hackers out there who are promising kickbacks in order to get more business.

[1] Anyone know how you would report that on your taxes? Kickbacks from line 1
or something?

~~~
beachstartup
it happens all the time. multiple (larger) companies i've worked for have had
these scandals come to light.

the shady LLC or sometimes offshore corporation just recognizes it as normal
revenue.

~~~
viggity
worse yet, a lot of times the fleeced company sweeps it under the rug. the
$X00,000-$X,000,000 that they they were screwed out of isn't worth the hit the
stock price takes as the market judges the existing leadership for not
catching it sooner. I personally know of a case where a VP did this with
contractors to the tune of ~$1.5M at a mega-bank. Just got fired, no pressed
charges, no civil suit. Too embarassing.

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wmf
A better headline would probably be "Netflix Sues a Former Exec For Allegedly
Collecting Kickbacks". His current job is not relevant to the suit.

~~~
sergers
I agree with wmf.

I was pondering what he could have done? Resell Netflix or redistributed
captured video from Netflix?

Nope... Nope...

Its about suing form employee, who is also the now cio of yahoo, defrauded
netflix and took money from Netflix by taking cuts of deals aka "kickbacks"
from vendors where netlfix paid to vedors $X but the guy took 15% of $x for
himself through a IT firm he has/had(?) On the side.

It is pertinent to note he is CIO of yahoo as there would probably be
repercussions to yahoo if he gets convicted, but leaving out he is a former
employee and these fraudulent actions took place while he was employed by
Netflix, not yahoo, at the time

~~~
Alupis
> It is pertinent to note he is CIO of yahoo as there would probably be
> repercussions to yahoo if he gets convicted

They may even drop him before/even-if-not convicted. It's bad PR for Yahoo to
say the least. (and it's unlikely that such a bold/public claim will end up
being completely meritless)

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discardorama
Looks like the original article's title has been changed: now it says "sues
former exec", which is a critical part of the story.

Mods, can you change the title accordingly?

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jamesaguilar
I don't know exactly how much Netflix pays this guy, but if it was at least as
much as Glassdoor claims we pay our directors, I really can't understand why
he would risk that for an extra $300k.

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yen223
Because if you have no ethics, this is risk-free money. Make no mistake, the
news here isn't that an exec (allegedly) defrauded his company, the real news
is that _the company is seeking legal action_.

~~~
NobodyReally
It's not risk-free, though -- this thing could end his career. It's a
terrible, stupid, error in judgment involving taking a huge risk for frankly-
not-a-lot-of-reward.

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lern_too_spel
I wonder how Netflix discovered this. Was the new IT director going to end
those contracts before receiving the same offer that his predecessor got from
the vendor? If so, the smart thing for Netflix to do would be to try the same
with all their vendors before going public with a lawsuit.

~~~
NobodyReally
[http://blogs.wsj.com/cio/2014/10/03/cloud-makes-netflixs-
vp-...](http://blogs.wsj.com/cio/2014/10/03/cloud-makes-netflixs-vp-of-it-
position-redundant/)

Netflix wasn't planning to replace Kail, and there was no "new IT director."

~~~
lern_too_spel
Whatever they call the person who handles the IT contracts then.

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kev009
I wonder how common this kind of thing is. It was definitely going on at a
previous place I worked at.

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jdawg77
So, at one point when I worked at Yahoo, there was an organization called,
"SDS." Near as I ever could tell, there were consultants were were at Yahoo
and also employees (double dipping in similar fashion) but that could have
been my misinterpretation of things. There were a few people who were
contractors, then employees of the company, and who's former company still had
contractors working at Yahoo at the time. It's interesting to see this happen
now, so many years since I've worked there.

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x0x0
tl;dr

    
    
       The Netflix suit says Kail, who joined the company in 2011, arranged Netflix 
       contracts with IT service companies Vistara and NetEnrich, and then pocketed 
       commissions of 12 percent to 15 percent of the monthly fees Netflix paid 
       each company.
       
       Netflix says it paid the two companies a total of $3.7 million from 2012 
       until Kail’s departure, which would mean he could have collected between 
       $450,000 and $560,000. The suit says he funneled the payments to “Unix 
       Mercenary,” a consulting company he controls. Netflix said Kail approved all 
       payments made to vendors.
    

if true, that's pretty damn shady. And stupid, frankly -- was $0.5m worth
fucking your life up? I bet that's about his annual salary. I have to be
honest: risking destroying my career, or jail time, for my annual salary isn't
even a tiny temptation. You have to get up in the low millions before I need
to think about it before saying no...

