Back in 2014, Netflix sued its former CTO, Michael Kail, accusing him of taking bribes before he eventually left the company to join Yahoo (in 2016 Yahoo merged with AOL to form Oath, which was the parent company of Engadget before it was purchased by Verizon). He was eventually indicted on charges of taking $690,000 in kickbacks from tech companies that had contracts with Netflix, a scheme the company said it uncovered based on reviewing emails in his work account.
The trial was delayed due to the COVID pandemic, but on Friday a jury convicted Kail on 28 of the 29 counts he faced. In a statement to Bloomberg, Kail’s attorney proclaimed his innocence, accused Netflix of using its influence as a powerful company to drive the prosecution and said there will be an appeal of the verdict. During the trial, Law360 reports that his defense attributed the deals to Netflix’s “no rules” culture, and said they were legitimate.
According to FBI Special Agent in Charge Craig D. Fair, Kail “created a pay-to-play environment whereby he stole the opportunity to work with an industry pioneer from honest, hardworking, Silicon Valley companies.” In a statement from the prosecution, it broke down the payments from companies to Kail’s consulting firm, and what they were paid by Netflix. It says he received over $500,000 and stock options from the companies.
Netflix has not commented publicly on the result, but in 2014 it said the various vendors involved were paid more than $4 million, with Kail receiving commissions of 12 to 15 percent from at least two companies. Netflix and Kail settled their lawsuit in 2015. He remains released on bond pending sentencing, and could face up to twenty years in prison as well as a fine. Regardless of what happens during sentencing or the appeal process, between this and the recent $690 million Ponzi scheme, Netflix is racking up its own library of true crime documentary content.
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