[HN Gopher] Netflix Executive Sentenced to 30 Months for 700K Br...
___________________________________________________________________
Netflix Executive Sentenced to 30 Months for 700K Bribes, Kickbacks
from Vendors
Author : altmind
Score : 274 points
Date : 2021-12-17 16:33 UTC (6 hours ago)
(HTM) web link (www.justice.gov)
(TXT) w3m dump (www.justice.gov)
| riazrizvi wrote:
| The system isn't much good if infractions against its rules go
| unpunished. Faith in the system is being restored.
| criddell wrote:
| I'm waiting for the vendors to be punished as well.
| 0x0nyandesu wrote:
| Nah it's just a howto manual on not getting caught.
| meabed wrote:
| And just name every consulting org or big vendor that they don't
| do this in every industry.
| 0x0nyandesu wrote:
| I love how it's totally legal for the governor of Florida to send
| lucrative drug testing contracts to his wife's owned company but
| a guy getting a few stock options from a client is illegal.
|
| I guess we'll just go back to big wads of cash in an envelope
| instead.
| bumby wrote:
| I had to look that up because I'm not familiar with the story,
| but it seems illegal in most other states. This Netflix case,
| by contrast, is federal. Still makes the Gov. actions seem
| sketchy
| wombatpm wrote:
| Florida politics is sketchy be definition as they are an
| outgrowth of representing 'Florida Man'
| koheripbal wrote:
| This comment does not belong on HN
| bumby wrote:
| You know "Florida Man" is really just an outcome of Florida
| criminal records being open and creating an availability
| bias, right?
|
| If other states had open records, there'd be much more
| fodder to create a "Wisconsin Man," "California Man" etc.
| the_doctah wrote:
| Whataboutism
| wyldfire wrote:
| > I guess we'll just go back to big wads of cash in an envelope
| instead.
|
| Uh so wait are you saying that because the elected official
| isn't held responsible that we should then lower the bar to
| permit all bribery? That doesn't make any sense.
| 0x0nyandesu wrote:
| The sense comes from that part of growing up when you come to
| the realization that it happens whether you want it to or not
| so not participating and acting holier than thou about it
| just makes you a sucker.
| BINGCHILLING wrote:
| "Kail facilitated the payments, the evidence at trial showed, by
| creating and controlling a limited liability corporation called
| Unix Mercenary, LLC."
|
| i wonder how much the name choice had to do with the convinction
|
| he could have definitely chosen something more tasteful lol
| coldcode wrote:
| I worked at a company where the CIO routinely bought technologies
| for us to use, but we never did as they were mostly pointless to
| our business. He also always wrote articles for the companies
| bragging how much the software improved our business. One time
| one company sent a PR person to interview us and they were
| astonished to find out we never used it. Long after I left he was
| perp walked out of the company by a new CEO; turned out they
| company finally hired someone with more tech knowledge than this
| guy. Of course he had been taking kickbacks but knew just enough
| to convince the other execs we "needed" it.
|
| A week later he had another CIO job. I think he was fired from
| that one too.
|
| No idea if he was ever put on trial, probably the case was too
| embarrassing to pursue.
| diab0lic wrote:
| The actual title is "Former Netflix Executive Sentenced To 30
| Months For Bribes And Kickbacks From Netflix Vendors ". Mike left
| Netflix in 2014 and joined Yahoo and CIO for a moment before this
| all came out and Meyer put him on leave.
| altmind wrote:
| It wasn't intentional, the headline was too long to fit.
| diab0lic wrote:
| That makes sense, haha. That probably is the word I would
| have removed as well in that case. :)
| nsgi wrote:
| HN should really increase the max title length, there's
| plenty of space and the current limit often requires
| important details to be cut out
| krapp wrote:
| But it isn't truly Hacker News unless it's formatted to
| be read on an 80 column monitor.
| colejohnson66 wrote:
| With 8 space indents per column for threading as per GNU
| style?
| airstrike wrote:
| I think 'Former' is a key word here, showing Netflix is no
| longer affiliated with him. And "700K Bribes" reads like the
| number of bribes, not dollars collected
|
| Also @dang
| tgv wrote:
| He was a netflix executive when he took the bribe, so that
| seems completely acceptable: "Michael Kail used his highly
| compensated Netflix position to siphon cash and valuable stock
| options from his tech vendors,"
| sudo-it-all wrote:
| The fact that "this is common" does not excuse the fact that it
| is wrong and unethical. This is similar to how Intel paid
| companies to not use AMD processors. It is anti-competitive
| behavior.
| choiway wrote:
| Unix Mercenary, LLC is brazenly on the nose.
| JohnJamesRambo wrote:
| Now this is what we need to see to effect change in corporate
| behavior.
| nerdponx wrote:
| Kind of, but he only got in trouble because he messed with
| other rich people's money.
| artursapek wrote:
| Not sure why HN is downvoting this, because this is 100% how
| the world works lmao
|
| Here's a nice article on this topic:
| https://www.bloomberg.com/opinion/articles/2019-03-13/you-
| ha...
| diob wrote:
| Very much so, like how only small banks in 2008 got
| destroyed.
| de6u99er wrote:
| I don't even allow companies to invite me for dinner or lunch,
| except if we do it in a way where I pay one time and the business
| contact pays the other time out of our own pockets.
|
| It is important to me that I am able to make the best possible
| decision at any moment. I don't want someone else veing in a
| position where I can ve forced to do something I don't want to
| do.
| throwfaangus wrote:
| Why risk this even? Surely, he's making much more than 700K as an
| exec in the first place.
| petters wrote:
| There could be much more and the case only covered what could
| be proved.
| Ensorceled wrote:
| Our VP of <region> Sales was fired for stealing peoples lunches
| from the break room fridge.
| [deleted]
| rvnx wrote:
| When you deal as a supplier to a big SV company, it can still
| happen that the employee asks you for a kickback. It's sad and
| it sucks.
| ipaddr wrote:
| It might be part of some cultural structure in place. He got
| caught..
| airstrike wrote:
| I don't think all Vice Presidents as a rule make more than
| $700k
| ghaff wrote:
| Very well-compensated people apparently can get sufficiently
| unmoored from a moral compass that they 1.) think the rules
| don't apply to them and 2.) just don't stop to consider that
| morals/ethics aside what they're doing is a really dumb
| potentially life-ruining risk.
| adventured wrote:
| It probably wasn't just the $700k he was thinking about. I'd
| guess he was likely aiming for a larger sum over time.
| fshbbdssbbgdd wrote:
| There's no limit to the amount of money one can waste.
| usea wrote:
| Wealthy people usually still want more money, even past what
| non-wealthy people would consider enough.
| snarf21 wrote:
| Not just want, they feel _entitled_ to it. It is their
| _RIGHT_. This is why we have such a wealth gap, the game is
| rigged.
| brian_cunnie wrote:
| The two multimillionaires I know (one sold his company to
| JPMC, the other, to Google) aren't driven primarily by money.
| They have a genuine interest in what they do (securitizing
| carbon offsets, and designing analog circuits, respectively).
|
| They're what you'd call "good guys".
|
| They wouldn't be caught dead in that crazy kickback scheme
| that was described.
|
| I know this is a small sample set, but what I've come away
| with is that rich people are like you and me, except they
| happen to be rich.
| [deleted]
| Topgamer7 wrote:
| Probably about 30 months of work ;)
| wly_cdgr wrote:
| Shoulda been more like 120 months, but it's better than nothin'
| kbenson wrote:
| > and serve a three term of supervision upon release from prison.
|
| Is there a typo in there, is that just a weird legal term, or is
| it just me that has a hard time processing what that means?
| edoceo wrote:
| Likely the missing word is Year - ie: he get three years
| probation after release.
| kbenson wrote:
| That makes sense. I just figured that an official release
| from a government site (I checked the URL after I stumbled on
| this sentence a couple times to make sure it wasn't some
| random law blog, but an official .gov site) would be a bit
| better proof-read, so didn't want to assume. Also, I probably
| still need another 30 minutes for the coffee this morning to
| fully suffuse into my being so I can function like a normal
| person.
| shadowgovt wrote:
| I'm 99% certain that should say "three-year term."
| [deleted]
| everybodyknows wrote:
| Also this, with directionality of "bribe" reversed:
|
| >Mr. Kail chose which IT contracts were awarded by Netflix
| according to how he was able to bribe those companies to
| provide him with financial compensation
| ghaff wrote:
| Little bit weird but it's not wrong. He bribed the companies
| with contracts to get them to give him a kickback.
| camel_gopher wrote:
| Did he get feedback from his peers?
| scotty79 wrote:
| Does anyone feel like wire fraud is a catchall term for when some
| people are hellbent on sentencing someone, who didn't do anything
| that was by itself a crime?
|
| Shouldn't this be a civil case between Netflix and this guy? Why
| is criminal justice system even involved in this? It looks like
| very bad way to spend tax payers money.
| ghaff wrote:
| Because, cynicism (and specific elected officials) aside, the
| government has a vested interest in people viewing it as a
| country of laws rather than a country of whatever you get off
| with is fair game.
| hpoe wrote:
| If you get caught stealing $700,000 you've got a problem.
|
| If you get caught stealing $700,000,000 the criminal justice
| system has a problem.
| calvinmorrison wrote:
| if you owe the bank 50,000, you have a problem, if you owe the
| bank 50,000,000, the bank has a problem
| paulpauper wrote:
| if you owe the bank 500,000,000,000 the bank has a problem
|
| if you owe them 500,000,000,000,000,000 you got a value
| overflow error
| everybodyknows wrote:
| Bernie Madoff's damage was a few billion, depending on how you
| count it. Turned out was a problem for him, eventually.
|
| https://www.cnn.com/2021/04/14/business/bernie-madoff-dead/i...
| colpabar wrote:
| When I read things like this, I can't help but think of how _no
| one_ went to jail after the 2008 financial crisis. $700k from a
| group of private companies? WHO CARES? Congress just said insider
| trading is ok when they do it, can we maybe go after some of that
| next time?
| barcoder wrote:
| Note this is the former IT exec from 2014. These type of trials
| take a while to complete
| dheera wrote:
| So did they hold him in prison from 2014 to 2021? What did he
| do during those years? There should be some law about time
| waiting for trial counting toward the sentence, which would
| also incentivize judges to work more quickly.
| temp_praneshp wrote:
| Look him up on linkedin :) He was in my leadership chain for
| part of that time at Yahoo.
| SippinLean wrote:
| He was indicted in 2018 and released on bail
|
| https://www.justice.gov/usao-ndca/pr/former-netflix-inc-
| vp-c...
| dheera wrote:
| Interesting. Maybe they should take 3 years off his
| sentence.
|
| When the judges find out, next time they will work faster
| to get trials done in days instead of years.
| dustymcp wrote:
| Imagine the money he has to pay in prison for protection
| kingcharles wrote:
| I know this is just an off-the-cuff quip, but the real answer
| is probably zero. He's minimum security. He's going to have
| very little problems like this, even as a rich white guy.
|
| When I was locked up, I was in Max with mostly murderers. I got
| tricked out of a $10 phone card in my first week, and the guy
| said he'd protect me as a thank you. After I realized I'd been
| dumb I never made that mistake again. I found just being
| polite, but firm, was enough.
|
| He'll be fine. He'll probably never get into a single fight.
| He'll be asked for commissary. He'll share some of his
| commissary, but everyone does that in prison anyway, especially
| with the guys that have nothing.
| hermannj314 wrote:
| Can someone with more legal expertise explain why he is charged
| with wire fraud and not "accepting a kickback"?
|
| Is it legal to take bribes if you do it in a way that doesn't
| create wire fraud? Was the crime taking kickbacks or was the
| crime being paid in a certain way (i.e. the LLC he created)?
| captainoats wrote:
| Specific anti-kickback laws only exist at the federal level for
| specific industries within federal purview like healthcare
| (through departments like CMS). Wire fraud is more general but
| is an avenue for the justice department to prosecute behavior
| like this (the crime is not specific to orchestrating a
| kickback scheme but defrauding his employer for personal gain).
| [deleted]
| abraae wrote:
| > Shortly thereafter, Kail provided Platfora with Netflix's
| internal information about Platfora's competitors' prices.
|
| Do said competitors now have grounds for a lawsuit against
| Netflix itself?
| qwertyuiop_ wrote:
| Why is Vistara LLC not charged for bribing this guy
| ?https://www.linkedin.com/company/vistara
|
| I know anecdotally a lot of US based Indian Outsourcing
| companies, TCS, Infosys, Mahindra, HCL bribe the mid-senior IT
| executives by buying them offshore properties under LLCs. If you
| look at Avis, Disney and other corps, the top level IT execs are
| bribed to the gills by these companies.
| everybodyknows wrote:
| Maybe they don't leave a paper trail a mile wide and deep,
| unlike this clown?
|
| > Two days before Unix Mercenary was registered with the
| California Secretary of State, Kail signed a Sales
| Representative Agreement to receive cash payments from
| Netenrich, Inc., amounting to 12% of any billings ...
|
| This is not to excuse the criminality, but rather to suggest an
| unhappy likelihood that the great bulk of graft flows by more
| sophisticated arrangements.
| artursapek wrote:
| Imagine being a Netflix executive and risking years of your life
| for $700,000
| PragmaticPulp wrote:
| Every time this story comes up, the comments are filled with
| people proclaiming that kickbacks like this are totally normal
| and very common.
|
| I can't tell how much of it is random people projecting their
| cynicism onto the business world, or if it's people who have been
| part of bribery/kickback schemes themselves trying to normalize
| the behavior online.
|
| Either way, cases like this should make it clear that the
| behavior is _not_ a good idea.
| ksec wrote:
| >I can't tell how much of it is random people projecting their
| cynicism onto the business world
|
| Is this on HN? Because I rarely sees it. Most people working in
| Tech and specifically software development are so abstracted
| from these type of things they think they are extremely rare.
|
| It is still a common thing though. At least it happens much
| more often than most people thought. And it is not cynicism but
| personal experience.
| 3maj wrote:
| Happens in manufacturing allll the time, especially if you're
| contracting our work to companies in India/China/Vietnam/etc.
| jdavis703 wrote:
| If you're on a government contract, it's quite likely you're
| exposed to all sorts of opportunities for wrong doing, even
| as a technical worker.
|
| Try talking to a retired government worker for juicy stories
| some time (there are three generations of tech workers in my
| family, and all of us have done government work or
| contracting since the 1960s).
|
| This is why government workers and contractors have to take
| so much anti-corruption training (I've never been subject to
| this in any purely private sector jobs).
| handrous wrote:
| Those of us not in elite circles have a little trouble getting
| worked up over the difference between something that looks like
| it's scummy, immoral cheating, but is legal, or the same, but
| illegal.
|
| Same played out with the college entrance scandal. "Bribery is
| great and we love it a bunch--unless you do it wrong because
| you're not rich enough to do it right, then it's a big ol' no-
| no" is the message a great many received from that one.
| [deleted]
| bko wrote:
| My question is how this could lead to jail time? I mean, its
| against policy, the employer can sue for damages, fire the
| person, etc. But to throw someone in jail for breaking
| essentially a corporate policy seems really off.
| fecak wrote:
| It's corporate corruption and this type of behavior prevents
| companies from competing fairly. It's bigger than "corporate
| policy". That's like saying "theft" is against corporate
| policy, so when I embezzled $10K I should just get fired
| instead of jailed.
| BrazzVuvuzela wrote:
| > _But to throw someone in jail for breaking essentially a
| corporate policy seems really off._
|
| It "seems off" because that obviously isn't what happened.
|
| > _Jury Earlier Returned 28 Guilty Verdicts Convicting
| Michael Kail of Fraud and Money Laundering for Pay-To-Play
| Payments from Tech Startups Seeking Netflix Contracts_
|
| These are crimes, not mere violations of corporate policy.
| bko wrote:
| > "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."
|
| So the person took bribes and hurt other tech vendors and
| the corporation. Sure. But suppose you hurt the
| organization and partners by being incompetent at your
| work. Or having bad judgement, or being lazy, or a million
| other things. Would it be okay to send those people to
| prison?
|
| "Pay-to-Play" isn't illegal. I don't even know what it is.
| Coke pays to have their beverage in AMC theaters. Is that
| pay to play? Is Pepsi more worthy of that slot? "Money
| Laundering" is incredibly broad and can be applied to a lot
| of things.
| BrazzVuvuzela wrote:
| Mate, they got him for numerous counts of wire fraud,
| money laundering, and more. These are all crimes, not
| mere violations of corporate policy. If you can't square
| your understanding of the law with what happened, it's
| your deficient understanding of the law that is to blame.
| Axien wrote:
| Netflix is a publicly traded company. They have a fiduciary
| responsibility to the shareholder to increase shareholder
| value by always selecting the best interest of the
| shareholders. It is way beyond a corporate policy. It is
| stealing shareholder value.
| BeFlatXIII wrote:
| Oh no, not the shareholder value! How high up on the org
| chart do employees have a direct fiduciary duty to the
| shareholders? Presumably there is some breakpoint below
| which is becomes mere incompetence.
| citizenpaul wrote:
| This was pay to play and the play was not delivered. Hence the
| blowback from upset "victims" coming after their money.
|
| Kickbacks are common sorry man. Its harder in public sector
| because of the eyeson you but there are ways around it. You
| just have to be in the right position.
|
| Kickbacks are almost never posecuted because both sidea get
| what they want.
| DFHippie wrote:
| There are more than two sides.
| vmception wrote:
| or not _trying_ to normalize but pointing out that its already
| normalized to the point that you can't be an effective employee
| due to competition with people winning deal flow via kickbacks
|
| The actions in question occurred almost 10 years ago, how many
| people lost commissions and bonuses and promotions and jobs and
| relationships by trying to play fair?
|
| acknowledging this isn't being an apologist for it or condoning
| it
|
| even the DOJ indictment only acknowledges Netflix
| _shareholders_ being deprived of tiny tiny amounts of profits,
| not everyone at all the other companies in the wake over the
| last decade, which is kind of a slap in the face and like a
| joke that public servants actually bothered, using _that_
| rationale.
|
| so with that reality the incentive is still there to kickback
| and relax
| avgcorrection wrote:
| How do you propose that one solves this?
| vmception wrote:
| The wrong people are being prosecuted, they are going after
| the most well connected node in a graph only when noticed.
|
| It should not be a criminal charge.
|
| And the civil charge likely needs to be levied elsewhere,
| and let the individual perpetrator be embroiled in private
| litigation with the employer and associated companies.
|
| I see the same absurdity in the FCPA. Americans are sent
| into to foreign and already corrupt markets to land
| business, but if they do anything competitive in that
| corrupt market, then they ... have to pay a kickback to the
| United States too as punishment for paying kickbacks?
| avgcorrection wrote:
| Some good points.
| president wrote:
| Yes, this is effectively a race to the bottom situation and
| is a form of corruption of the rule of law. In today's world,
| we tend to have a culture of "letting things slide" and all
| this does is gradually normalize and escalate breaking the
| law over a long period of time.
| zapataband1 wrote:
| Cost of wage theft by employers is 3 times the total cost
| of burglaries. There's a few articles about wage theft over
| the year and probably 100 a day about burglaries. White
| collar crime does not pay.
| savingsPossible wrote:
| That is the most amazing statistic!
|
| What exactly is the definition of wage theft? Do you have
| a source? I would love to have it
| ceh123 wrote:
| Not sure about this source, but [0] gives some insight
| into this. Wage theft is typically defined as legally
| earned wages than an employer refuses to give to the
| employee (think tips not being given appropriately,
| overtime hours not compensated for as an hourly employee,
| etc.)
|
| [0] https://www.epi.org/publication/wage-theft-bigger-
| problem-fo...
| wayoutthere wrote:
| It's a side effect of having so many laws that it's
| impossible not to break some of them. And this is coming
| from someone on the left.
| pyronite wrote:
| I'm not aware of any laws I've unintentionally broken.
| Which kinds of laws are you speaking of?
| cik2e wrote:
| * I'm not aware of any laws I've unintentionally broken.
| *
|
| So, working as intended?
|
| I get what your meaning but this phrasing cracked me up.
| horsawlarway wrote:
| Ever been under 18 and owned a spray paint can or a
| permanent marker? Crime.
|
| Ever connected to an open wifi network without directly
| confirming with the owner you're allowed? Crime.
|
| Ever held your phone while driving? Crime. Happen to also
| be headed downhill and hit 1mph over the limit? Double
| crime!
|
| Ever walked across your street outside of clearly marked
| crossings? Crime.
|
| Ever sung happy birthday in public? Crime.
|
| Ever played a poker game for small stakes at home? Crime.
|
| Ever had a pet and not registered them with your county?
| Crime.
|
| Ever peed outside? Crime.
|
| Ever bought something online and not reported it for
| taxes? Crime.
|
| Ever sat on the sidewalk? Crime.
|
| The list goes on and on.
| gunshai wrote:
| This read like straight out of a Legal Eagle Youtube
| video.
|
| I think this is like the exact list in a recent video of
| his. Great channel by the way if people are unfamiliar
| [deleted]
| Cerium wrote:
| For those questioning the online taxes - if you are in
| California you absolutely have to pay taxes on these
| purchases. You can pay actual taxes or an "estimate"
| based on your income if you believe you have normal
| levels of purchasing.
|
| From [1]: Generally, if sales tax would apply when you
| buy physical merchandise in California, use tax applies
| when you make a similar purchase without tax from a
| business located outside the state. For these purchases,
| the buyer is required to pay use tax separately.
|
| [1] https://www.cdtfa.ca.gov/taxes-and-fees/use-tax.htm
| _jal wrote:
| Right, I'm sure a white-collar exec took kickbacks
| because poker is banned in some jurisdictions.
|
| I agree that we massively overcriminalize things. But
| apologizing for a crook this way is just silly.
|
| (Not to mention you're factually incorrect on some of
| this, universalizing the rest when it isn't universal,
| and generally being very hyperbolic.)
| horsawlarway wrote:
| I'm responding directly to the comment above, asking
| which crimes they might have unintentionally committed.
|
| You'll notice I make no comment about the kickbacks here.
|
| And yes - the whole POINT is that none of these are all
| that intuitive, and they vary by region. So the odds are
| very good that you're violating _some_ city /town/state
| ordinance fairly often, but the lack of enforcement means
| you never consider it.
| Sohcahtoa82 wrote:
| > Ever sung happy birthday in public? Crime.
|
| I'm assuming this is regarding Happy Birthday being
| copyrighted? If so, you should know that that copyright
| was declared invalid, and Happy Birthday is now public
| domain.
|
| https://en.wikipedia.org/wiki/Happy_Birthday_to_You#Copyr
| igh...
|
| Also, copyright infringement is only a crime if it is
| done for financial gain. Otherwise, it's a civil issue.
| You won't get jailed for pirating a movie. You CAN get
| jailed for SELLING pirated copies of a movie.
|
| > Ever played a poker game for small stakes at home?
| Crime.
|
| I heard this isn't true unless the host takes a rake,
| though this might depend on the state.
| ___q wrote:
| "Happy birthday" is public domain and
|
| you don't need to report things you buy online on your
| taxes
| ghaff wrote:
| >you don't need to report things you buy online on your
| taxes
|
| In at least some states (e.g. Massachusetts) you are
| indeed supposed to report out of state purchases brought
| into the state whether or not the company selling to you
| collected the state sales tax or not. (Larger companies
| shipping to you now have to collect.)
| horsawlarway wrote:
| > "Happy birthday" is public domain
|
| Only after 2016. Before that you would have been on the
| hook for ~$700 per performance to warner media group.
|
| Admittedly, in most "Private" settings, you'd be fine.
| The most common place to get flagged was in a restaurant
| where the waiters sing to you.
|
| > you don't need to report things you buy online on your
| taxes
|
| Ooof, I got some bad news for you, buddy. You ABSOLUTELY
| DO need to report any online purchase that does not
| charge you sales tax at time of payment. Most retailers
| will now do this (primarily because Amazon abused the
| shit out of this to give customers an additional ~10%
| off, and the IRS started handing out fines) but for
| things like: Craigslist, Ebay, Alibaba, etc - You better
| be reporting it, you little criminal you.
| ___q wrote:
| > Only after 2016.
|
| Which it is right now, so "happy birthday" is public
| domain.
|
| > You ABSOLUTELY DO need to report any online purchase
| that does not charge you sales tax
|
| The original post didn't say "that do not charge tax."
| Yes you must pay taxes where applicable, like all
| purchases.
| horsawlarway wrote:
| He asked which laws he might have unintentionally broken.
| Unless he's an incredibly literate 6 year old... I
| suspect he's old enough to have sung happy birthday
| before 2016, which would have been breaking the law.
|
| The original post also didn't specify that you picked an
| online vendor that's calculating this tax for you... And
| in some places, you're _still_ supposed to be reporting
| it! Fun times!
| ___q wrote:
| Which laws were this Netflix exec's crimes an impossible
| "side effect" of?
| educaysean wrote:
| I'm curious - which specific laws have you found to be
| "impossible not to break"?
| indymike wrote:
| > I can't tell how much of it is random people projecting their
| cynicism onto the business world, or if it's people who have
| been part of bribery/kickback schemes themselves trying to
| normalize the behavior online.
|
| I think most people don't understand the difference between an
| agreed to agency fee/reseller margin deal, a direct incentive
| program, and someone just taking money, on the side. Direct
| Incentives (also call spiffs) are where a supplier pays a bonus
| directly to the person who sold the deal. These are always
| agreed to between the companies and reported. Without
| permission of the employer, they could be very illegal or a
| major violation of your employment contract.
| vishnugupta wrote:
| I know of people who AWS fully sponsored, including business
| class intercontinental travel, to attend re:Invent which is
| essentially a week long holiday party, by virtue of AWS bill.
|
| Every vendor has marketing budget and a decent portion of it
| goes to keeping their point people at clients happy. You can
| call it kick back or whatever, it's a matter of semantics.
|
| So yes it is normal. And no it's neither cynical and nor have I
| been involved in. But I've seen it happen around me. So I know
| it's a routine thing.
| jimkleiber wrote:
| I don't think the argument "I've seen it happen around me"
| means that it is necessarily routine or common throughout
| society. If I'm a basketball player and most of the people
| around me can dunk a basketball, while it may be common in my
| circle, it certainly is not common throughout the American or
| global population.
| boiler_up800 wrote:
| Not the same at all. Paying for people to attend your event
| versus paying them directly as income are worlds apart.
| ghaff wrote:
| While normal business travel can have a bit of a boondoggle
| aspect to it (and your example would probably not be OK for
| US government employees), it's not generally considered a
| personal payment or gift as a kickback would be. So, no, it's
| not the same thing in the manner that paying for someone's
| personal vacation week on a tropical island would be.
|
| Companies pick up at least some expenses for customers,
| partners, journalists, analysts, etc. to attend business
| events all the time. And everyone involved is very clear
| about the difference between that and handing them a stack of
| bills under the table.
|
| (And speaking for myself, I can think of a lot of places that
| I'd rather be than Las Vegas for re:Invent.)
| spockz wrote:
| Working in finance, I have to report any gift above EUR50.
| This includes when I would receive a gift or lottery for a
| training, a conference, etc. So for us it is at least
| treated like a potential personal payment.
| stefan_ wrote:
| There is no magic loophole by giving people stuff rather
| than paying them money directly. In tax law this is just
| called a non-cash benefit and it is taxable all the same.
| I'm sure the people writing corruption guidelines had the
| same insight.
| ghaff wrote:
| The "loophole" is that, for gifts of more than a token
| amount, it has to be a legitimate business expense--
| whoever is picking up the bill. Waiving a conference fee
| and covering some or all of the travel expenses to a
| conference, would widely be considered legitimate
| business expenses. Normally these would be picked up by
| my company these days if I had a business reason to
| attend an event and I need to pay for registration and
| travel. But conference organizers routinely waive at
| least the conference fees for journalists, analysts,
| speakers, and possibly others they want to attend.
| staticassertion wrote:
| That is not really close to what these charges are.
|
| Kail received money and stock directly, not as part of a
| business or sales exchange. Being flown to a conference where
| you'll be told the merits of your potential purchase is
| obviously very different.
|
| Even if Kail had innocently owned stock in a company being
| evaluated it likely would have been a conflict of interest
| and they should have stepped away from the evaluation. This
| happens all the time. As a CEO I can tell you I've had people
| stop a call partway through because they realize they're
| conflicted out of the discussion and I'll have to talk to a
| neutral party.
| smsm42 wrote:
| Things like that - e.g. conferences, paid travel, etc - are
| common. But I think it's different from a manager charging
| kickbacks for awarding an IT contract, and on only by pure
| semantic.
| tssva wrote:
| At one point in my career I was one of those people. Not AWS
| but I went to many a conference on the vendor's dime. Ran up
| some impressive bar and restaurant tabs while there. Also on
| their dime. Some vendors didn't have large conferences and
| would fly me to a nice resort somewhere for a few days which
| included some product info sessions. Usually at that point
| the people trying to keep your business and those trying to
| get your business are all doing the same thing so it is all
| ineffective in influencing your choices. In fact during that
| time I would say a majority of the vendors I was involved in
| selecting actually did neither.
|
| At none of them was there any kind quid pro quo even hinted
| at. My employer knew about and approved all trips beforehand.
|
| This is way different than what happened here. Direct
| payments to an employee for award of work without knowledge
| of their employer.
| mattbee wrote:
| Kickbacks are a personal payment, an illegal personal
| incentive to a business transaction.
|
| This guy was soliciting cash and stocks! A crummy sponsored
| trip to a conference would have been arranged through the
| employer, and is not the same thing.
| mattbee wrote:
| Also, the set of people with a happy home life and people
| who are excited by corporate hospitality is a small one.
| stefan_ wrote:
| It's all fun and games until you swap AWS for Purdue Pharma
| and point people for doctors and suddenly there is an opium
| addiction epidemic. This shit has real consequences.
| bellyfullofbac wrote:
| I guess at least the courts are there to fix things...
| except when it's also okay for members of the highest court
| of the land to get sponsored golf/hunting trips, and even
| be caught dead in one...
| moneywoes wrote:
| What is this referencing?
| bellyfullofbac wrote:
| https://people.com/sports/antonin-scalia-died-during-
| getaway...
| apex3stoker wrote:
| I think in the UK they have laws which basically say that
| bribery is defined by employers. It is bribery if employers
| don't approve the payments/gifts as part of the job. I think
| it is similar in the US. People in your examples probably got
| the approval, but this Netflix executive definitely didn't
| according to the article.
| PragmaticPulp wrote:
| > I know of people who AWS fully sponsored, including
| business class intercontinental travel, to attend re:Invent
| which is essentially a week long holiday party, by virtue of
| AWS bill.
|
| Flying people to an AWS conference seems entirely different
| than funneling money into a single person's bank account.
|
| Yes, I know these conferences have a party-like atmosphere,
| but it's not done surreptitiously and it's not siphoning
| money out of the deal into someone's pockets.
| cheriot wrote:
| Pharmaceutical companies used all inclusive "conferences"
| to influence doctors to prescribe more opioids. It was
| effective enough to be banned.
|
| > Accepting a free trip to a drug-company-sponsored
| conference guided doctors to write more prescriptions of
| the company's drugs, a spike of 80 to 190 percent
|
| https://www.drugwatch.com/news/2012/01/18/pharmaceutical-
| com...
|
| America is generally good about limiting things to legal
| graft. I can't offer an elected official money in exchange
| for a vote, but I can donate millions to entities
| controlled by the elected officials that are my "friends"
| and make sure they know about it.
| DangitBobby wrote:
| It doesn't really seem that different.
| moralestapia wrote:
| It is VERY different, come on.
|
| It's an open conference offered by the largest player in
| the space vs. a shady deal between a supplier and ONE
| person of another company, without its employers consent,
| on top of that.
| moltar wrote:
| It's different in facts, but it's not different in
| spirit.
|
| Did you know that pharma sales reps take out doctors to
| play golf all expenses paid, plus fancy restaurant lunch
| in the end?
|
| Is that different?
|
| How about a lobbyist donating money to a political party?
|
| Is that different?
|
| Google the law of reciprocity. It's human nature.
| rrrrrrrrrrrryan wrote:
| The main difference _here_ is the scale.
|
| "Let us take you on a $2000 vacation" vs. "Let us take
| you on a $700,000 vacation." One is objectively
| ridiculous - this is the difference.
| kjreact wrote:
| So what you're saying is taking a smaller bribe is okay?
| Just as long as it's not a "ridiculous" bribe...
| bumby wrote:
| There are thresholds elsewhere. For example, a civil
| servant can accept a gift, up to a very small amount,
| from a vendor without being an ethics violation.
| moralestapia wrote:
| It is different in spirit.
|
| A marketing scheme intended to attract new customers is
| well within what's morally accepted. Also, it's not like
| every guy that goes to AWS re:Invent comes back with a
| brand new luxury car. What they get is just some good
| food and drinks, while they're there, and that's just
| providing good hospitality for your guests. It also does
| not happen behind closed doors, and most of the people
| that go are already existing customers.
|
| vs.
|
| Corrupt company approaches corrupt employee off the
| record to offer cash in exchange of contracts that _would
| not get assigned to them otherwise_ (because if they
| were, they wouldn 't resort to this).
| DangitBobby wrote:
| If I know AWS will fly me out for good times every year
| (but only so long as I select them for my Big Enterprise
| Account), I'm more likely to pick them over a vendor that
| won't do the same, regardless of what's better for the
| company. Bribery doesn't require currency, it just
| requires an exchange of value.
| shakezula wrote:
| This situation is like lobbying: is it the people's voice
| in fungible action or is it mega-corporations funneling
| money directly into politicians pockets?
|
| The answer is probably both, and any attempt to litigate
| it will probably be abused and lead to even more issues.
| blacksmith_tb wrote:
| Hmm, even at my most cynical I would say the difference
| is the free conference is a much smaller (and thus
| presumably less effective) bribe. Giving away tickets to
| a conference which they sell the tickets for costs AMZN
| very little (sure, there are costs associated with
| putting it on, but those would have had to be paid
| anyhow, adding an attendee or two won't change much). So
| it's a few grand worth of airplane tickets vs. $700K...
| ludocode wrote:
| You think inviting someone to conferences is the same
| thing as putting $700k in their personal bank account?
|
| Is this satire? What is going on in this thread?
| bumby wrote:
| At least in the medical field, conferences only provided
| the thinnest veneer. Doctors were paid handsome fees to
| present, which is tantamount to dropping money in their
| bank account when you compare it to other professions
| whether people often go to conferences on their own (or
| company's) dime.
| twic wrote:
| Some people think that quantitative differences are never
| qualitative differences. Zero, one, infinity, right?
| StreamBright wrote:
| Heh, I have been working for a some corporations in the last 10
| years where there was a sort of kickback scheme in place.
|
| Some times (very rarely a person got caught, no criminal
| charges) some timed it was known and nobody cared.
|
| Some of my friend chose not to become managers because they did
| not want to get involved in the scheme.
| autokad wrote:
| what I don't understand is none of the companies that bribed
| him had criminal charges levied against them. doesn't this reek
| of companies doing bad ok, smash the ants?
| hintymad wrote:
| A rumor is that Reed Hastings made it his personal mission to
| ensure that Kail gets the right punishment for he breach the
| trust of freedom-and-responsibility that Netflix gave to its
| employees.
| mc32 wrote:
| I'm sure every employee has to read their company's code of
| conduct and those are quite unambiguous about what's allowed
| and what isn't and that which isn't is serious and will get you
| fired --no company wants to have to mobilize lawyers and waste
| hundreds of professionally billed hours for an employee
| violating regulations.
| d0mine wrote:
| Usually such things as CoC are worded in such a way that
| everyone is guilty. It is a tool by those in power to dismiss
| anyone they like.
| humanistbot wrote:
| "You must report all gifts from entities seeking to sell
| products or services to the company" seems pretty
| unambiguous.
| FooBarBizBazz wrote:
| The first time I heard someone talk about a "commission" in
| this context, I was totally confused -- "I thought salespeople
| got commissions, not customers?" -- until it all snapped into
| focus and I was like: "Oh." And from the way they talked, this
| was normal for B2B sales? So then I look at some decisions that
| have been made in companies where I've worked, and I wonder...
| coldtea wrote:
| > _I can 't tell how much of it is random people projecting
| their cynicism onto the business world, or if it's people who
| have been part of bribery/kickback schemes themselves trying to
| normalize the behavior online._
|
| Or people who actually know about those things, having worked
| in/with/studied the various industries, without having "been
| part of bribery/kickback schemes themselves", and have seen
| them to be fairly widespread - that's a missing third option.
|
| I added this, because the above comment is still that of the
| proverbial starry-eyed kid arriving with the bus to L.A. from
| Nebraska, and paints a false dichotomy that ends up with the
| same conclusion ("this can't possibly be widespread"):
|
| (a) it's either cynical people (so this isn't widespread, it's
| just their cynicism that thinks so)
|
| (b) or it's crooks looking to normalize their behavior (so this
| isn't widespread, it's just isolated "bad-apple" cases
| justyfing themselves)
|
| Even merely studying different industries, you'll find such
| scandals (and worse) in some of the biggest companies on Earth,
| with upper management knowledge and encourangement,
| collaboration with local governments, cover-up and diplomatic
| protection from the company's own government, and so on.
|
| Just an example, from one of the biggest companies in the
| world, with tons of different executives and branches involved,
| and with different corruption cases all around the world:
|
| https://www.sec.gov/news/press/2011/2011-263.htm
|
| https://www.sandiegouniontribune.com/sdut-lt-latam-siemens-b...
|
| https://www.reuters.com/article/norway-siemens-idUSL13418322...
|
| https://www.nytimes.com/2008/12/21/business/worldbusiness/21...
|
| https://en.wikipedia.org/wiki/Siemens_Greek_bribery_scandal
|
| How about IBM:
|
| https://medium.com/worm-capital/the-ibm-hall-of-shame-a-semi...
|
| https://www.wsj.com/articles/u-s-drops-multi-country-bribery...
|
| https://fortune.com/2017/07/27/ibm-poland-investigation/
|
| https://www.bbc.com/news/business-12793255
|
| Microsoft?
|
| https://www.zdnet.com/article/microsoft-to-pay-25m-to-doj-an...
|
| https://www.reuters.com/article/us-microsoft-settlement-idUS...
|
| GE and more:
|
| https://www.cnbc.com/2019/05/17/fbi-targets-johnson-johnson-...
|
| https://www.ojp.gov/ncjrs/virtual-library/abstracts/whistleb...
|
| https://www.industryweek.com/the-economy/regulations/article...
|
| A general study focusing on past:
|
| "As the 2000s decade progressed, a different breed of corporate
| scandals began to surface. For example, companies such as ABB
| Limited, Daimler Chrysler, El Paso Corporation, General
| Electric, Halliburton, Lee Dynamics, Lucent Technologies, and
| Siemens AG were found guilty of violating U.S. law and
| consequently, also rattled shareholders' trust (Cascini &
| DelFavero, 2008, p.27). The named businesses were found guilty
| of committing bribery (...)"
|
| https://digitalcommons.sacredheart.edu/cgi/viewcontent.cgi?a...
|
| And we haven't even got into weapons, aviation, construction,
| and medicine industry bribes (industries which are to bribes
| what Xerox PARC was for UI innovations!)
| jimkleiber wrote:
| I guess for me it comes down to numbers. What does "fairly
| widespread" equate to? 50% of American corporate executives
| do this? 10%? 1%? Or are we talking about global executives
| at firms that net over $1B revenue per year?
|
| It may seem nitpicky and yet I think the context and
| statistics matter--without it, I think we can fall into very
| binary discussions of people being corrupt or clean, bad or
| good.
| PragmaticPulp wrote:
| > I guess for me it comes down to numbers. What does
| "fairly widespread" equate to?
|
| Exactly. It's easy to search the internet internet for 10+
| news stories about just about any bad behavior over the
| past decade, but that doesn't make it the norm.
| mathattack wrote:
| I will state this isn't normal for large enterprises, at
| least at that scale. Most software vendors are happy to
| invite buyers to Warriors games, which is a lot cheaper than
| the 0.25% dilution. I've even seen folks recuse themselves
| from recommending prior employers because they still had
| shares.
|
| I think the problem lands somewhere between "widespread
| corruption" and "never."
|
| Salespeople can hit their quotas without kickbacks.
|
| What I do see from time to time is this happening "fully
| disclosed"'at the very senior level. A CEO of a major
| database company convinces the board to buy a firm that he
| has an interest in. A CEO "allows" a company to rent out his
| property for corporate housing. These are fully disclosed,
| and therefore considered acceptable.
| coldtea wrote:
| > _I will state this isn't normal for large enterprises, at
| least at that scale. Most software vendors are happy to
| invite buyers to Warriors games, which is a lot cheaper
| than the 0.25% dilution._
|
| Salesforce or GitHub selling seats to some random company
| sure don't.
|
| Large software vendors like Microsoft, Siemens (their
| software dept), IBM, and more, have routinely bribed all
| around the world to win government contracts.
| throw7 wrote:
| Well, do you think our politicians aren't in the same position
| of the esteemed Michael Kail, VP of Netflix IT Operations?
| People in power are going to be hit with sex, money, or power.
| Money, it seems, is just the easiest attack vector.
| AtlasBarfed wrote:
| More to the point, virtually every senior member of
| Presidential administrations do this almost blatantly, big-D or
| big-R, doesn't matter.
|
| This was hundreds of thousands. Those are billions.
|
| What's the difference? The person who got caught was a small
| fry and couldn't pull the strings.
| DFHippie wrote:
| > More to the point, virtually every senior member of
| Presidential administrations do this almost blatantly, big-D
| or big-R, doesn't matter.
|
| This is the sort of cynical thing people say because other
| people say it. Spiro Agnew did it, sure. That was a while
| ago. What are your other examples? Since virtually every
| member does this, you should have hundreds. And remember you
| need a roughly balanced count of Republicans and Democrats.
| Obama was in office for 8 years. That should be quite a pile.
|
| Pure cynicism is an argument against rules and accountability
| generally.
| AtlasBarfed wrote:
| It used to simply be the revolving door back to executive
| industry positions, which is what ALL the FCC and their ilk
| are headed by. Those exec positions used to function as the
| main "deferred bribery" mechanism, because who can question
| someone getting another job once the administration job
| ended? You mentioned the Obama administration, I remember
| the massive criticism early in his admin with the number of
| revolving door appointees to the various industry-focuses
| administration positions. The pay cuts they had to take for
| "public service", and the "oh look at their sacrifice to
| their country". OH PLEASE. PLEASE.
|
| Now since citizens united, it's my impression that the
| lobbying industry / K street is now completely awash in
| money even moreso and that is the main source of "deferred
| bribery". I think near the end of the Obama admin there was
| going to be a rule change about joining a lobbying firm
| when you were done with congress. Holy crap did a lot of
| congress quit all of a sudden. They were cashing in.
|
| Rudy Giuliani made a million bucks a year from his law
| firm. Why? He's not a good lawyer.
|
| There is also cush jobs for family members and numerous
| other ways to do such things. Biden's son is an example,
| I've seen really crummy stories around Clarence Thomas's
| family a decade ago that made me realize the Supreme Court
| was far from an ivory tower immune to corporate influence.
|
| Let me ask you a question: why does EVERY SINGLE, D or R,
| president take a trip to Saudi Arabia near the end of their
| presidencies? They are the effing president of the USA and
| they travel TO Saudi Arabia to basically kiss the royal
| family's butt?
|
| Washington is AWASH in money. Yet nobody significant, the
| central focus of the all that lobbying money, goes to jail.
|
| This is hilariously like NCAA football, but with less
| scrutiny, far more money. Everyone knows its going on,
| nobody talks about it, sometimes someone gets busted for
| going "too far".
| Phillip98798 wrote:
| x
| cowpig wrote:
| Your point, as I understand it: you disagree with a jury's
| conclusion in one, high-profile case, therefore the entire
| justice system isn't necessary or there should be no
| consequences for white-collar crime.
|
| Or perhaps more charitably: you've become disillusioned about
| the judicial process in general, seeing a lot of results you
| consider unjust, therefore the entire justice system isn't
| necessary or there should be no consequences for white-collar
| crime.
|
| Neither is even a bit convincing. If one can significantly
| increase their personal wealth at mere risk of being fired,
| then the least honest people will accumulate all the wealth
| and power.
| [deleted]
| cgriswald wrote:
| That kind of comparison is meaningless and useless. The
| question should not be, "Should we criminalize fraud if
| people disagree about the results of this one specific
| unrelated case?"
|
| The question should be, "Should we criminalize fraud and if
| so what are the optimal penalties for disincentivizing new
| and repeat activity?"
| rpmisms wrote:
| > Eschew flamebait. Avoid unrelated controversies and generic
| tangents.
|
| > Please don't use Hacker News for political or ideological
| battle. It tramples curiosity.
|
| We could definitely talk about the criminal justice system,
| but basically saying "the jury was wrong and I'm mad" isn't
| substantive.
| dylan604 wrote:
| Oh please. Ever watched Mad Men, or any other tv/film that
| shows the wining and dining of prospective clients by a sales
| person/team? Every time a sales person spends money on a
| prospective client is written off as an expense, so the gov't
| is pretty much condoning it.
|
| There are tons of stories of big pharma sending doctors to
| lavish resorts in the guise of a "conference". Ever heard of
| payola? The music business has been based on bribes. Why would
| you think of the film business being different? Hell, the
| states are involved just as much with tax incentives to entice
| productions to use their state/cities as location for that
| production.
|
| You're being quite cynical trying to wrap any person with
| knowledge of these payout schemes as being involved/complicit.
| gnatman wrote:
| Mad Men is a fictional TV show set in the 1950s. "Big Pharma"
| sending doctors to resorts is now illegal in the US under the
| Sunshine Act.
| pyb wrote:
| This guy was able to extract kickbacks from _nine_ different
| vendors. So in fact, it looks quite a few companies have
| systems in place to "facilitate" deals if needed.
| lern_too_spel wrote:
| And none of these nine vendors (or any of their competitors
| that Kail might have approached) reported the crime to the
| authorities.
| dkdk8283 wrote:
| It's human nature to scratch each other's backs. It's
| happening, will continue to happen, and there's little which
| can be done.
|
| It's always a game of cat and mouse. Legalizing small time
| bribery where it can be done out in the open would probably be
| far more effective then advocating for things like increased
| workplace surveillance.
|
| Thinking commerce can happen without corruption or kickbacks is
| just naive.
| acover wrote:
| It's also human nature to murder each other. Natural doesn't
| mean good.
|
| https://ourworldindata.org/ethnographic-and-
| archaeological-e...
| autokad wrote:
| its nature to murder. humans murder each other far less
| than other primates.
| __alexs wrote:
| The behaviour of many execs I have worked with would be
| explained well by this sort of arrangement, but it could
| equally have been a mix of stubbornness and having no clue.
| It's politer to assume it was corruption.
| coffeefirst wrote:
| I'm always reminded that HN is global, and sometimes people are
| representing what's normal or common where they're sitting, not
| necessarily everywhere.
| jimkleiber wrote:
| I appreciate you pointing this out, I easily forget this.
|
| I think the extreme version of this is me taking something
| that is routine or normal for me individually and assuming
| all other humans must do it. Or taking something that my
| spouse, boss, or parent did and assume all spouses, bosses,
| or parents must do it. Not necessarily.
| notch656a wrote:
| The average American may earn something like 125k in 30 months.
| 700k in exchange for a small chance of 30 months in jail
| probably sounds like a good deal to a purely rational and
| amoral person.
| bgirard wrote:
| But it's not usually the average American in a position to
| receive bribes like that. 700K for an executive might not be
| a good deal for most.
| notch656a wrote:
| Depends on the probability of being caught, which is
| usually extremely low.
| bgirard wrote:
| True, but at those levels the marginal utility of money
| is much lower than 30 months of your life. Clearly some
| people take the chance, I wouldn't.
| jjulius wrote:
| Edit: Half-awake, math wrong, ignore me.
| notch656a wrote:
| If 700k - p_caught * (value of 30 months of your life +
| 700k + reputation + fines) is greater than 0, a rational
| and amoral person should execute the trade.
| colejohnson66 wrote:
| Am I reading your comment correctly? GP says that, over 30
| months, the average American makes $125k. Given a $68k per
| year average that you provide, that's $170k after 30
| months, which is even more than GP estimated. Even if the
| average were $40k/year, that's still $100k after 30 months.
| jannyfer wrote:
| Looks like jjulius used 20 months in a year.
| jjulius wrote:
| I used 12 months in a year and went up to 20 months, too
| tired to realize that they were talking about 2.5 years
| instead of 1.5. Original comment edited, my mistake,
| let's all go back to sleep now.
| notch656a wrote:
| Said they made "something like." I'm sorry for not making
| it clearer it was meant to be a rough guideline not a
| precise number.
| 0x0nyandesu wrote:
| The average executive in a high money industry like film is
| clearing a lot more than that and is looking for any and all
| advantages that come from the position. It can come in any
| form from having a company car to getting an executive
| producer credit on some show they actually didn't produce.
| You're naive if you actually think this doesn't happen
| everyday in the film industry / culture. That's just business
| and it's part of the free market. I don't see how any of this
| is any business of the feds.
| codegeek wrote:
| Except that he has to return the 700k, Pay additional fine of
| 50K , go to Jail for 30 months and not to mention that his
| reputation is ruined and he will never get another high
| profile white collar job. Yea, totally worth it.
| notch656a wrote:
| In retrospect yes. If you can prove the probability he
| would be caught is low enough, then you could probably show
| it was worth the risk. I don't know what that probability
| is, but based on how rare executives are actually nabbed
| over this sort of thing I'm not so sure we can say with
| certainty he made a bad bet.
| dkyc wrote:
| The average American likely isn't in a position to make
| business spending decisions that would warrant a 700k bribe,
| though.
| [deleted]
| pwarner wrote:
| I haven't even gotten a new Datadog shirt in years :-(
| blamethenetwork wrote:
| I was there and saw some of this during my time at Netflix.
|
| I've also been in the industry long enough to get my own sense of
| what is / what is not reasonable.
|
| The first thing, Netflix wise, is to understand their culture
| deck at the time. One of the main things was "Act in Netflix's
| best interest". That basically described their philosophy of how
| employees should act.
|
| So, when signing a contract, where you get a 10% kickback, (eg
| the company pays $200/hour and you get $20 as a commission, its
| better to have the company pay $180.)
|
| Also, signing contracts that he was enriched by - stock,
| kickbacks etc. (he received what is now worth: $862,500 of
| sumologic, and $2,167,700 of netskope - trial document #276
|
| He also signed contracts that were never deployed, had a long
| support lifetime, or didnt meet the companies needs - eg:
| Numerify, and docurated - trial document # 288
|
| In some cases, I personally experienced us having to use tools
| that Mike had signed for that were not right for the job. Eg:
| Sumologic at the time was a horrendous product. It certainly was
| not a realtime logging system. Realtime was up to 15 minutes
| delayed. If you wanted realtime, it was all about syslog. I
| brought this up, and was told that we were using the product
| because of Mike, even though it clearly did not help our
| problems. Grep on the unix server was considerably faster and
| more up to date, (but it wouldnt have got Mike $2M of stock).
|
| Mike also had me meet with him and various vendors who were
| pitching some fly-by-night ideas. In a normal world, I'd say they
| were very early startup ideas that weren't a match for our needs.
| Now, I'm wondering if these were meetings where Mike was looking
| to get an "advisory" angle.
|
| In summary, I've been to coffee, dinners, very nice meals etc.
| with vendors. I've had them invite me places for meetings, and
| I've gone with my companies permission and understanding. I've
| had non-compensated advisory positions. The difference though, is
| my company was aware of it, and I did not receive stock or
| engineer contracts such that I received kickbacks. Thats where
| the line was, and thats why he's going to jail.
| coding123 wrote:
| One thing that is interesting about this is not that these
| vendors made the initial suggestion of a kickback. Instead Kail
| said he would get them in as a vendor if they made him some
| important person at their company. So the idea of the kickback
| wasn't from the vendor.
| parhamn wrote:
| Some of the vendors mentioned:
|
| - VistaraIT, LLC
|
| - Platfora, Inc.
|
| - Sumo Logic, Inc
|
| - ElasticBox, Inc
|
| - Numerify, Inc.
|
| - Docurated, Inc
|
| - Maginatics, Inc.
|
| Is what they did illegal too? Presumably with zero chance of
| being charged. I haven't fully groked the limits of 'fraud' and
| 'money laundering' here in the US. These typically feel like they
| should be civil breach of fiduciary duty type cases.
| shadowgovt wrote:
| IANAL, but in general: yes. Someone should be on the hook for
| _paying_ bribes as well as for receiving them. At least, that
| 's what every training on corporate bribery I've ever seen
| asserts.
| 8ytecoder wrote:
| Not just should, they usually are. But I would also assume
| prosecutors use discretion to decide whether to charge them
| or not based on whether they do it as a pattern, whether
| they're in their jurisdiction and whether they were coerced.
| I read this to mean one or multiple of it didn't hold.
| nightpool wrote:
| From TFA: Evidence at trial showed that
| several more companies paid Kail. Neither Netenrich, Vistara,
| nor any of the other companies were charged with criminal
| conduct. Only Kail was charged with devising the criminal
| scheme that defrauded Netflix.
|
| Since Kail was charged for wire fraud and mail fraud (deceiving
| Netflix about his personal compensation and conflicts of
| interest), it seems possible that the companies could be
| charged with "conspiracy to commit wire fraud" for colluding
| with him? It's hard for me to say exactly how easy this would
| be to prove--I think it's pretty clear to say that most
| companies / people should know that paying someone on the side
| for inside information on competitors or paying the VP a % of
| all contracts is an act to defraud Netflix. So the "meeting of
| the minds" to commit fraud is there, and the actual fraud is
| there (because one of the participants in the conspiracy
| committed it). But obviously this stuff is complicated and i'm
| not a lawyer. Also, the companies themselves would probably be
| pretty hard to charge, rather than the individual sales reps
| who signed off on the payments.
| everybodyknows wrote:
| > paying someone on the side for inside information on
| competitors
|
| That seems like the proper litmus test for bribery _by_
| vendors, as distinct from "shakedown" / "pay to play" i.e.
| extortion _from_ vendors.
|
| Wonder if really shrewd extortionists try to make victims
| complicit, by sending them inside info never asked for?
| leagueoflegends wrote:
| VistaraIT, LLC renamed itself to OpsRamp to distance themselves
| from this debacle
| skuhn wrote:
| I'm glad to see the verdict and a relatively severe sentence
| handed down (I expected 6-12 months).
|
| What Mike did was indeed unethical and fraudulent. It's also
| extremely foolish and shows poor judgment on his part -- his role
| at Netflix was to lead the organization to identify and implement
| the best solutions for the company and its customers. Instead he
| saw the opportunity for short-term personal gain at the company's
| expense, and by doing so he jeopardized his lifetime earnings
| potential that would have been many times greater. I hope this
| sends a message to anyone else in his position that there can be
| consequences.
|
| I've been responsible for tens to hundreds of millions in annual
| expenditure, and to even have the appearance of vendor favoritism
| (let alone kickbacks, bribes, payoffs) is anathema to me. I have
| vendors that I like to work with because they do good work and
| they help me to make things happen, but even my favorite vendor
| is evaluated and earns the business on the merits every single
| time.
|
| I have declined seemingly innocent gifts from vendors (and
| notified my management). I always turn down things like sports
| tickets and paid trips. I do let vendors pay for the occasional
| lunch, but only up to a point that I feel comfortable.
| Maintaining my independence is absolutely key to my role and my
| career.
|
| I've also worked at places where even a paid for lunch is not
| acceptable. That won't influence my decision-making one iota, but
| if those are the rules then I follow them.
|
| Not everyone does that, but I don't know anyone in the industry
| who thinks Mike's behavior is OK. Anyone working for me who made
| unjustifiable decisions with vendor agreements would make me re-
| evaluate their position -- and if I found a pattern along the
| lines of Mike's behavior, they would be dismissed and sued just
| like him.
| herodoturtle wrote:
| This is both an insightful as well as an important comment.
|
| Thanks for sharing it.
|
| Readers of HN should take note - especially young up-and-
| comers.
| encryptluks2 wrote:
| If you're poor and steal 700k you go to prison for life. If
| you're wealthy and do it as an executive you get 1 year with good
| behavior.
| jbkiv wrote:
| This is not an uncommon practice in the Silicon Valley. Startup
| wants to business with Big Co., invites Big Co.'s decision maker
| (VP Marketing, CIO, CTO, CFO) to join the "board of advisors".
| Then startups pays for expenses, travel and grant "stock options"
| to Big Co. senior manager.
|
| Understand that ANY product has a "side" price tag, paid by
| granting options or "payment for expenses" to the senior
| individual. Another way to look at that. Ask ANY member of your
| board of advisors to disclose ANY conflict of interest.
|
| If StartUp sells product/services/SaaS to BigCo. then BigCo.
| "advisor" should disclose ANY payment, direct or indirect, travel
| or non-travel, and ANY stock options.
|
| This is what had to be done with the large drug companies,
| forcing them to disclose payments to providers/medical doctors
| who had the authority to buy drugs. Full disclosure + penalties
| for lack of disclosure ---> that was the end for the drug sales
| rep who were doling "educational conference tickets, all expenses
| paid for you and your spouse, ALL expenses paid, and of course
| compensation for your time". Of course said conference had to
| happen in Tahiti, San Francisco, Seychelles, etc...
| duffpkg wrote:
| I created a company around an Open Source Electronic Medical
| Records system I also created, ClearHealth. It took me a couple
| of years to realize we were losing deals for health systems not
| because our system was bad (it was great), not because our sales
| teams were bad (they were great) but because we weren't engaging
| in kick-backs and outright bribery. This has become such a
| normalized part of business at institutions that it is extremely
| hard to be competitive if you don't do it.
|
| https://www.justice.gov/opa/pr/electronic-health-records-ven...
| lordnacho wrote:
| Did people ask you for bribes, did you say no, did you miss the
| hints, or did you just not know that you needed to do this?
| duffpkg wrote:
| After losing some deals that just seemed like there was no
| credible way we could lose, better "product", better price,
| better team, etc. You start asking hard questions about all
| the people involved and eventually someome will
| confidentially explain what happened. Especially people who
| actually need to work with the worse vendor that just got
| selected.
|
| If you read through the settlement I linked ("The settlement
| also resolves allegations that ECW paid kickbacks to certain
| customers in exchange for promoting its product.") and other
| documentation regarding that case you can find details of
| several situations. I am singling out ECW there because that
| settlement exists. You would have to be pretty naive to think
| they were the only vendor engaged in that type of behavior
| and that the recipients of kick backs were only receiving
| kick backs from them alone.
| lordnacho wrote:
| Thanks for answering, I always wonder how people find out
| things like this. For me it's like racism, how will you
| ever know the real motivation? I guess sometimes you will
| get some discreet feedback.
| [deleted]
| ChrisArchitect wrote:
| Some previous discussion about the conviction 2 months ago:
|
| https://news.ycombinator.com/item?id=28918805
| tonymet wrote:
| Only $700,000? Must not have been very ambitious
| clavicat wrote:
| I just lost $5,000 this week and it's pissing me off, so I can
| empathize.
| themdonuts wrote:
| Genuine question here. Who took him to court? Did I understand
| well it was a public institution/Irs? There seems to be no
| mention of netflix (company) being involved in the trial on the
| accusation side.
| parhamn wrote:
| It's a federal crime. The US Government took him to court. As
| for who tipped them off, thats a different question.
| errcorrectcode wrote:
| I had a boss at a major university who might've done this had he
| thought he could get away with it. Instead, he kept his greed
| down to an "acceptable" level of theft of university property for
| personal use and exploitation of vendor's client entertainment
| allowances.
| 0x0nyandesu wrote:
| Why is this even illegal? Perks in the industry is normal. People
| are always trying to get their own businesses front and center
| for contracts. Some of these companies just don't have much to
| give out other than equity and what exactly is wrong about that?
| [deleted]
| [deleted]
| lowkey_ wrote:
| For another example, look at how college bribery schemes are
| illegal.
|
| They're not illegal because they're unfair or immoral, they're
| illegal because the administrator is selling the spot that the
| college owns; it's not his/her spot to sell.
|
| If the company wanted to be used by Netflix in exchange for
| equity, then they could make a deal with Netflix itself. This
| executive was essentially selling the rights to contracts (akin
| to spots) that he didn't have the right to sell.
| BeFlatXIII wrote:
| I thought the college bribery schemes were mostly illegal
| because the lowered the price for a guaranteed admission slot
| too much and, more importantly, cut the university out of the
| loop by paying the admissions personnel directly.
| 0x0nyandesu wrote:
| You mean like forcing kids to buy brand new books so that
| they can get a code to use to take tests on an online
| platform that the professor gets kickbacks from that has
| nothing to do with the university the kid is attending?
| lowkey_ wrote:
| What's the spot/contract/etc in that case, that the
| professor is selling but doesn't have the right to sell on
| behalf of the university for his own enrichment?
|
| I don't see an example of how the university is losing
| revenue and being defrauded in that scenario.
| 0x0nyandesu wrote:
| The student is being defrauded. They signed up for
| something that was supposed to cost x but instead it
| costs y. Their degree being in jeopardy makes it
| blackmail from my perspective.
|
| It's telling that you were more willing to make sure the
| university wasn't being defrauded but I guess the student
| can kick rocks right?
| lowkey_ wrote:
| No, what I was trying to initially explain is that it is
| Netflix being defrauded. You pointed out that the company
| may only have equity to give, and I said that they
| weren't giving the equity to Netflix. They were giving it
| to an executive at Netflix in exchange for a contract,
| and it wasn't the executive's right to give that contract
| spot away for his own enrichment, because it's not his
| spot to give.
|
| Similarly, in the case of college admissions scandals, it
| is the college being defrauded.
|
| Now here, to make a parallel as you were intending, we'd
| have to see how the university is being defrauded.
| Sohcahtoa82 wrote:
| The University is not being defrauded, but the professor
| is still taking advantage of their position to make a
| personal profit.
|
| Leaving aside the legal issues (I'm not a law expert, so
| I don't know if it is illegal), don't you think it is
| _incredibly immoral_ for a professor to require a
| specific book for their class on the basis that the
| publisher is going to hand a check to the professor?
| s1artibartfast wrote:
| It was illegal because the kickbacks were kept secret from
| Netflix. If there was full disclosure to netflix, (but not
| other companies) this would have been perfectly legal.
| humanistbot wrote:
| Officially, the crime is fraud and the victim is Netflix, Inc.
| He defrauded the other employees and the corporate
| shareholders. He also laundered the money, which is also
| illegal and why the IRS got involved.
|
| Kickbacks aren't the fundamental issue here. If this was a
| single-employee startup with no other investors or
| shareholders, this would be perfectly legal. Or if Netflix,
| Inc. had a policy that authorized individual executives to
| personally receive cash and stock from vendors as perks, then
| this would have been perfectly legal. However, as the article
| says, Netflix had an internal policy that he blatantly
| violated:
|
| > Netflix policies prohibited conflicts of interest by its
| employees by its Code of Ethics and its "Culture Deck," which
| required the disclosure of actual or apparent conflicts of
| interest and the reporting of gifts from entities seeking to
| sell products or services to the company.
| 0x0nyandesu wrote:
| As a Netflix share holder I'm gonna say that this is a cost
| of doing business in Hollywood. Nothing this exec did is
| actually a problem. Half these people are at each other's
| houses ever day fucking each other's wives at swinger
| parties.
| humanistbot wrote:
| > this is a cost of doing business in Hollywood.
|
| First off, these were tech vendors giving kickbacks to the
| CIO, not producers bribing studio execs to get someone
| specific cast.
|
| But you seem to be missing that kickbacks aren't illegal in
| and of themselves. Netflix corporate didn't have to
| institute an anti-kickback policy for its employees. But
| they did, likely because they didn't want an environment
| where execs are negotiating both for the company and for
| themselves. The moment an executive violates corporate
| policy to enrich themselves, it becomes fraud.
| throwawayFanta wrote:
| What this exec did was very illegal, but anyone in the startup
| scene would know that things like this are very common, but
| probably on a smaller scale.
|
| Maybe there are no wads of cash changing hands, but I've
| personally seen contracts being earned less due to the feature
| set, but more because the startup got introduced to some C level
| and them applying downward pressure to choose that startup during
| the vetting process.
|
| It's kinda noticeable when you're on a call with a big company's
| tech team and they sound defeated when talking about the success
| criteria and stuff
| moneywoes wrote:
| Did Netflix not pay him enough?
| [deleted]
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