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Netflix Digital Restrictions (DRM) and Crimes

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  • Has Netflix Peaked?

    The shortfall points to how the streaming pioneer is naturally losing the ability to add so many customers. That’s especially true in the U.S. and Canada, where quarterly subscriber gains have slipped into the hundreds-of-thousands realm from the millions (Netflix projects the figure may even be flat in the current quarter). But the stock move was an overreaction. Maybe even the wrong reaction.

  • Former Netflix Executive Convicted Of Receiving Bribes And Kickbacks From Companies Contracting With Netflix

    A federal jury convicted Michael Kail, the former Vice President of IT Operations at Netflix, of wire fraud, mail fraud, and money laundering, announced Acting United States Attorney Stephanie M. Hinds, Federal Bureau of Investigation Craig D. Fair, and IRS-Criminal Investigation Acting Special Agent in Charge Michael Daniels. The verdict follows a two-week and a half week trial before the Honorable Beth L. Freeman, U.S. District Judge.

    Kail was indicted May 1, 2018, of nineteen counts of wire fraud, three counts of mail fraud, and seven counts of money laundering, in violation of 18 U.S.C. §§ 1341 (mail fraud), 1343 (wire fraud), 1346 (honest services fraud), and 1957 (money laundering). The indictment also sought forfeiture of Kail’s Los Gatos residential property. The jury returned a verdict of guilty on 28 of the 29 counts.

    “Bribery undermines fair competition and innovation in any business arena, and particularly Silicon Valley’s highly competitive environment of cutting-edge innovation,” said Acting United States Attorney Stephanie M. Hinds. “As Netflix’s Vice President of IT Operations, Michael Kail wielded immense power to approve valuable Netflix contracts with small tech vendors, and he rigged that process to unlock a stream of cash and stock kickbacks to himself. Netflix and other companies expect and deserve honest services from its employees.”

  • Netflix former exec found guilty of taking ‘pay-to-play’ bribes

    A former executive for Los Gatos media-streaming giant Netflix was found guilty Friday of felony fraud and money laundering.

    A jury found Michael Kail, vice-president of internet technology at Netflix from 2012 to 2014, guilty of more than two dozen counts for accepting cash, stock options and gifts from third-party vendors in exchange for contracts with the firm.

    “He used his kickback payments to pay personal expenses and to buy a home in Los Gatos,” the U.S. Department of Justice said in a statement Friday that referred to “pay-to-play bribes.” The verdict means the house — valued at about $3 million by Zillow — will be forfeited to the federal government, the department said.

  • Former Netflix Executive Found Guilty of Fraud, Bribery – Courthouse News Service

    A former Netflix executive was convicted of bribery, fraud and money laundering in connection to kickbacks he received from technology companies that partnered with the streaming company.

    Michael Kail was found guilty by a federal jury after a week-and-a-half trial and the verdict was handed down by a 12-person jury in San Jose, Calif. in the court of U.S. District Judge Beth Labson Freeman.

    Kail, 52, was vice president of internet technology at Netflix from 2011 until 2014, where he managed contracts with small outside vendors for IT-related services. The evidence presented at trial showed that Kail accepted personal bribes from nine different technology companies for in exchange for arranging contracts between the parties.

Netflix built a DRM empire using crime

  • San Jose, California Federal Jury Convicts Former Netflix Executive of Receiving Bribes and Kickbacks from Companies Contracting with Netflix, DOJ Reports

    "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. "Bribes and kickback schemes, such as those facilitated by Mr. Kail, undermine the fabric of competition in Silicon Valley, and the FBI will aggressively pursue anyone who attempts to criminally exploit their position for personal gain."

    “High-ranking corporate officials hold positions of trust not only in their companies, but also in the eyes of the public,” said Michael Daniels, Acting Special Agent in Charge IRS Criminal Investigation. “That trust is broken when such officials abuse their power and commit crimes to unjustly enrich themselves.”

    According to the evidence presented at trial to the federal jury, Kail, 49, of Los Gatos, was employed at Netflix as the Vice President in charge of IT Operations from 2011 until July 2014. In this position, Kail owed Netflix his honest services. Netflix prohibited conflicts of interest by its employees in its Code of Ethics and its “Culture Deck,” which required disclosure of actual or apparent conflicts of interest and reporting gifts from people or entities seeking to sell to the company.

    As Netflix’s Vice President of IT Operations, Kail approved the contracts to purchase IT products and services from smaller outside vendor companies and authorized their payments. The evidence demonstrated that Kail accepted bribes in ‘kickbacks’ from nine tech companies providing products or services to Netflix. In exchange, Kail approved millions of dollars in contracts for goods and services to be provided to Netflix. Kail ultimately received over $500,000 and stock options from these outside companies. He used his kickback payments to pay personal expenses and to buy a home in Los Gatos, California in the name of a family trust.

Ex-Netflix Executive Convicted in Bribery-Kickback Scheme

  • Ex-Netflix Executive Convicted in Bribery-Kickback Scheme

    A former Netflix Inc. executive was convicted of taking kickbacks from vendors in exchange for approving millions of dollars in contracts for products and services, federal prosecutors said.

    A jury on Friday found Michael Kail, a former vice president of information technology operations, guilty of wire and mail fraud and money laundering after a two-week trial, according to a statement issued by the U.S. Attorney’s office in San Francisco.

    “Bribery undermines fair competition and innovation in any business arena, and particularly Silicon Valley’s highly competitive environment of cutting-edge innovation,” Acting U.S. Attorney Stephanie M. Hinds said in the statement.

    Kail used his influence at the company to rig its contracts with technology vendors “to unlock a stream of cash and stock kickbacks to himself,” Hinds said.

    Kail’s lawyer, Julia Mezhinsky Jayne, said in a statement that he will appeal the “inexplicable” verdict, which she said is unsupported by evidence and driven by Netflix.

Netflix VP convicted for fraud

  • Netflix VP convicted for fraud

    A federal jury convicted former Netflix vice president of IT Michael Kail on 28 fraud and money laundering counts.

    Kail, who was indicted in 2018, used his position to create a "pay-to-play" scheme where he approved contracts with outside tech companies looking to do business with Netflix in exchange for taking bribes and kickbacks.

    According to the Department of Justice's press release, Kail accepted bribes or kickbacks from nine different companies totalling more than $500,000 as well as stock options.

    Netflix sued Kail after he exited the company in 2014 to take a role as Yahoo's CIO, accusing him of fraud and breaching his fiduciary duties.

    One FBI agent says that Kail "stole the opportunity to work with an industry pioneer from honest, hardworking, Silicon Valley companies".

NetFlix executive Michael Kail convicted of fraud

  • NetFlix executive Michael Kail convicted of fraud, money laundering

    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.

Netflix's corruption

  • Netflix IT exec forced employees to use products from vendors that bribed him

    Netflix's former vice president of IT operations was convicted of taking bribes from technology vendors in exchange for awarding them contracts with Netflix, the US Department of Justice announced Friday. The former Netflix VP's illegal scheme forced colleagues to use a variety of products, including one that suffered from "severe" performance problems and another that Netflix employees objected to because they preferred a different product the company was already paying for, the DOJ said.

How a Former Netflix Exec Built a Brazen Bribery Scheme

  • How a Former Netflix Exec Built a Brazen Bribery Scheme

    NETFLIX'S FORMER VICE president of IT operations was convicted of taking bribes from technology vendors in exchange for awarding them contracts with Netflix, the US Department of Justice announced Friday. The former VP's illegal scheme forced colleagues to use a variety of products, including one that suffered from "severe" performance problems and another that Netflix employees objected to because they preferred a different product the company was already paying for, the DOJ said.

    [...]

    Two days before registering that company, "Kail signed a Sales Representative Agreement to receive cash payments from Netenrich, Inc. amounting to 12 percent of the billings from Netenrich to Netflix for its contract providing staffing and IT services to Netflix," the DOJ announcement said. "Later in 2012, Kail began to receive 15 percent of all billing payments that VistaraIT, LLC, a wholly owned company of Netenrich, received from Netflix. From 2012 to 2014, Netenrich paid Unix Mercenary approximately $269,986, and VistaraIT paid Unix Mercenary approximately $177,863. The payments stopped in mid-2014, when Kail left Netflix."

    Kail also had kickback agreements with the vendors Platfora, Sumo Logic, Netskope, Maginatics, ElasticBox, and Numerify, the DOJ said. For example, Kail "became an advisor and received options for shares in the company Sumo Logic" in June 2012 and then "authorized and signed on behalf of Netflix a vendor agreement between Netflix and Sumo Logic," the DOJ said, adding:

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