SILICON VALLEY, CA – A former vice president for Netflix was arraigned this week in federal court in San Jose on an indictment that accuses him in a scheme to defraud the Los Gatos-based video-streaming provider. Michael Kail, 49, of Los Gatos allegedly took $690,000 in kickbacks in exchange for approving payments to at least nine tech companies seeking to do business with Netflix, a federal grand jury indictment alleges.

The indictment against Kail is dated April 26 and was unsealed Tuesday in San Jose.

It alleges that between February 2012 and July 2014, Kail, formerly in charge of the company's Internet Technology department, executed a scheme to defraud Netflix of its right to his employment without conflicts of interest resulting in bribes or kickbacks, commonly known as honest services fraud.

Using the mail and interstate wires, including emails and an online document-signing platform, Kail received over $500,000 from at least three outside companies with which Netflix did business, the indictment alleges. "Kail further sought and received valuable stock options from numerous other Netflix business partners," said prosecutors with the U.S. Department of Justice Northern California District.

"In exchange for these payments, Kail allegedly approved millions of dollars in contracts for goods and services to be provided to Netflix by these companies," federal prosecutors said. The indictment alleges Kail created and controlled a limited liability company, Unix Mercenary LLC, to receive these kickback payments, which he used to pay personal expenses and to purchase a residence in Los Gatos.



The indictment charges Kail with 19 counts of wire fraud, three counts of mail fraud and seven counts of money laundering.

The indictment also seeks forfeiture of Kail's Los Gatos property.

Kail was released on a $200,000 bond secured by the Los Gatos residence. His next court appearance is scheduled for July 10.