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Former Netflix vice president convicted of fraud, kickback scheme

A former Netflix vice president has been convicted of fraud in connection with a complex scheme to provide hundreds of thousands of dollars with a rollback and stock options, U.S. prosecutors said on Friday.

Michael Kyle, 49, a former vice president of information technology for the Los Gatos-based service, was found guilty of 28 counts of fraud and money laundering after a two-week trial in federal court in San Jose.

According to federal prosecutors in the U.S. Attorney’s Office, Kyle has sought and accepted bribes and kickbacks from nine technology companies over contracts worth more than $ 2.9 million for services provided to Netflix. Prosecutors have accused Kyle of using more than $ 500,000 to buy a home in Los Gatos and pay for personal expenses.

Kail created a bogus corporation in 201

2 to facilitate the return of payments from Netflix technology providers such as Netenrich, Platfora, Sumo Logic and Netskope, prosecutors said.

“Bribery undermines fair competition,” acting US attorney Stephanie Hines said in a statement on April 30, announcing the verdict. “Michael Cale had tremendous power to approve valuable Netflix contracts with small technology vendors, and he falsified the process to unlock a flow of money and a rollback for himself.”

A federal probe was launched after Netflix sued Kail in 2014.

Kyle, who was indicted three years ago, faces up to 20 years in prison for each conviction for fraud and 10 years in prison for each conviction for money laundering. The sentencing hearing is expected to take place in the next three months before District Judge Beth Freeman.

The financial losses for Netflix were borne by the company and ultimately by consumers, who now pay $ 18 a month for a premium subscription.

Steve Rubenstein is a staff writer for the San Francisco Chronicle. Email: srubenstein@sfchronicle.com; Twitter: @SteveRubeSF

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