Former Netflix exec sentenced to prison

A former Netflix executive was sentenced to 2½ years in federal prison, fined $50,000 and ordered to forfeit $700,000 Tuesday for taking bribes and kickbacks from technology companies that had contracts with the videostreaming service.

Michael Kail, 52, the company's vice president for information technology from 2011 to 2014, was convicted by a San Jose federal jury in April of 28 felony charges of fraud and money-laundering.

He was sentenced by U.S. District Judge Beth Labson

Freeman, who ordered him to report to prison next March.

Prosecutors presented evidence that Kail collected more than $500,000 in personal payments, along with valuable stock options, from nine companies in exchange for approving contracts with the firms.

They said he used the money to buy a home in Los Gatos, where Netflix is headquartered, and pay personal expenses. None of the companies was charged with wrongdoing.

In one instance, prosecutors said, Kail signed a personal stock purchase agreement with a tech company, then provided that company with internal information from Netflix about competitors' prices before approving a $250,000-per-year Netflix contract for the tech company's products. Another tech firm paid Kail $5,000 a month, plus stock options, before he approved a $112,500 Netflix contract with the firm, prosecutors said.

After leaving Netflix, Kail worked briefly as chief information officer for Yahoo, then started his own software security company, Cybric.

“Mr. Kail's greed to enrich himself cost Netflix and its shareholders money and property by agreeing to contracts for goods and services beyond what the company needed or would have paid for,” Mark Pearson, an Internal Revenue Service investigator, said in a statement after the sentencing. “Mr. Kail abused a position of trust and facilitated a scheme that benefited himself.”

Prosecutors had sought a seven-year prison term and a $250,000 fine for Kail and said in court papers that a stiff sentence was needed as a warning to other greedy executives.

Kail's attorney, Julia Jayne, argued for a sentence of 12 months of house arrest and 500 hours of community service, calling the case “an aberration from his lifetime of honorable conduct.” She said Tuesday that Kail would appeal his conviction and sentence.

“Mr. Kail maintains that every vendor at issue brought value to Netflix and helped propel Netflix's success as a technology company,” Jayne said.