Monday, December 1, 2014

Netflix Sues Former VP of IT Operations Over Alleged Vendor Fraud & Kickback Scheme

From Bloomberg on 11/26/2014:

Netflix Inc. (NFLX) sued former technology executive Mike Kail, who joined Yahoo! Inc. (YHOO), for fraud, claiming he took cash kickbacks from two suppliers and had deals to receive stock, money or gift cards from other vendors.

Kail received commissions worth 12 percent to 15 percent of payments made to two companies, Netflix said in a complaint filed Nov. 24 in state court in San Jose, California. The vendors received almost $4 million in payments since 2012, said Netflix, the world’s largest subscription streaming service.

Kail, a former vice president of information technology operations, was in charge of negotiating contracts with companies that supplied products and services supporting Netflix’s computer systems, Netflix said. He hid the payments by having them paid to his personal consulting company Unix Mercenary LLC, according to the lawsuit. Kail left Netflix in August to join Yahoo as chief information officer.

E-mails showed that Kail would approve payments to the vendors and then invoice them for his cut, according to the lawsuit. In one November 2013 e-mail, Kail wrote a vendor that he’d approved its invoices “so would be good to understand who to work with on getting my portion paid.”

Anne Espiritu, a spokeswoman for Sunnyvale, California-based Yahoo, declined to comment. A voice-mail message left at Yahoo for Kail wasn’t immediately returned.

The commissions belonged to Netflix, the Los Gatos, California-based company said in the complaint, which alleges fraud, breach of fiduciary duty, unjust enrichment and unfair business practices, and seeks unspecified damages.


Read the whole story here.

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