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Megaupload founder's homes raided, $5M in luxury cars seized








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Friday, January 20, 2012 1:26 PM




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Megaupload founder's homes raided, $5M in luxury cars seized





By msnbc.com staff and news services

Police in New Zealand on Friday raided several homes and businesses
linked to the founder of Megaupload.com, a giant file-sharing site
shut down by U.S. authorities, and seized guns, millions of dollars,
and nearly $5 million in luxury cars, officials said.

Police arrested founder Kim Dotcom and three Megaupload employees
Thursday on U.S. accusations that they facilitated millions of illegal
downloads of films, music and other content, costing copyright holders
at least $500 million in lost revenue. Extradition proceedings against
them could last a year or more.

--------------------------------------------------------------------------------


David Rowland / EPA


(L-R) Bram van der Kolk, Finn Batato, Mathias Ortmann and German
national Kim Schmitz, also known as Kim Dotcom, are remanded in
custody at the District Court on charges in a US copyright
infringement investigation in Auckland, New Zealand, 20 January 2012.

With 150 million registered users, about 50 million hits daily and
endorsements from music superstars, Megaupload.com was among the
world's biggest file-sharing sites. According to a U.S. indictment,
the site, which was shut down Thursday, earned Dotcom $42 million in
2010 alone.










Although the company is based in Hong Kong and Dotcom lives in New
Zealand, some of the alleged pirated content was hosted on leased
servers in Virginia, and that was gave U.S. prosecutors jurisdiction
to act.
•RELATED: Anonymous says it takes down FBI, DOJ, entertainment sites

New Zealand police served 10 search warrants at several businesses and
homes around the city of Auckland.

Police spokesman Grant Ogilvie said the seized cars include a Rolls-
Royce Phantom Drophead Coupe worth more than $400,000 as well as
several Mercedes. Two short-barreled shotguns and a number of valuable
artworks were also confiscated, he added.

Pictures posted on Flickr and technology news website Gizmodo showed
the haul included a 2010 Maserati and a pink Cadillac. One Mercedes
had the personalized license place "MAFIA,"while another had a plated
that read "CEO."

A report by New Zealand news website stuff.co.nz said Detective
Inspector Grant Wormald from the Organized and Financial Crime Agency
NZ (OFCANZ) gave details of the extraordinary raid, which had been
planned for several months.

"Police arrived in two marked police helicopters," said Wormald,
according to the website. "Despite our staff clearly identifying
themselves Mr. Dotcom retreated into the house and activated a number
of electronic locking mechanisms. While police neutralized these locks
he then further barricaded himself into a safe room within the house
which officers had to cut their way into."

Once they gained entry into this room they found Dotcom near a firearm
which had the appearance of a sawed-off shotgun, Wormald said.

"It was definitely not as simple as knocking at the front door," he
added.

New Zealand's Fairfax Media reported that the four defendants stood
together in an Auckland courtroom in the first step of the extradition
proceedings.

'Nothing to hide'
Dotcom's lawyer raised objections to a media request to take
photographs and video, but then Dotcom spoke, saying he didn't mind
photos or video "because we have nothing to hide." The judge granted
the media access, and ruled that the four would remain in custody
until a second hearing Monday.







Megaupload founder's homes raided, $5M in luxury cars seized





By msnbc.com staff and news services

Police in New Zealand on Friday raided several homes and businesses
linked to the founder of Megaupload.com, a giant file-sharing site
shut down by U.S. authorities, and seized guns, millions of dollars,
and nearly $5 million in luxury cars, officials said.

Police arrested founder Kim Dotcom and three Megaupload employees
Thursday on U.S. accusations that they facilitated millions of illegal
downloads of films, music and other content, costing copyright holders
at least $500 million in lost revenue. Extradition proceedings against
them could last a year or more.

--------------------------------------------------------------------------------


David Rowland / EPA


(L-R) Bram van der Kolk, Finn Batato, Mathias Ortmann and German
national Kim Schmitz, also known as Kim Dotcom, are remanded in
custody at the District Court on charges in a US copyright
infringement investigation in Auckland, New Zealand, 20 January 2012.

With 150 million registered users, about 50 million hits daily and
endorsements from music superstars, Megaupload.com was among the
world's biggest file-sharing sites. According to a U.S. indictment,
the site, which was shut down Thursday, earned Dotcom $42 million in
2010 alone.










Although the company is based in Hong Kong and Dotcom lives in New
Zealand, some of the alleged pirated content was hosted on leased
servers in Virginia, and that was gave U.S. prosecutors jurisdiction
to act.
•RELATED: Anonymous says it takes down FBI, DOJ, entertainment sites

New Zealand police served 10 search warrants at several businesses and
homes around the city of Auckland.

Police spokesman Grant Ogilvie said the seized cars include a Rolls-
Royce Phantom Drophead Coupe worth more than $400,000 as well as
several Mercedes. Two short-barreled shotguns and a number of valuable
artworks were also confiscated, he added.

Pictures posted on Flickr and technology news website Gizmodo showed
the haul included a 2010 Maserati and a pink Cadillac. One Mercedes
had the personalized license place "MAFIA,"while another had a plated
that read "CEO."

A report by New Zealand news website stuff.co.nz said Detective
Inspector Grant Wormald from the Organized and Financial Crime Agency
NZ (OFCANZ) gave details of the extraordinary raid, which had been
planned for several months.

"Police arrived in two marked police helicopters," said Wormald,
according to the website. "Despite our staff clearly identifying
themselves Mr. Dotcom retreated into the house and activated a number
of electronic locking mechanisms. While police neutralized these locks
he then further barricaded himself into a safe room within the house
which officers had to cut their way into."

Once they gained entry into this room they found Dotcom near a firearm
which had the appearance of a sawed-off shotgun, Wormald said.

"It was definitely not as simple as knocking at the front door," he
added.

New Zealand's Fairfax Media reported that the four defendants stood
together in an Auckland courtroom in the first step of the extradition
proceedings.

'Nothing to hide'
Dotcom's lawyer raised objections to a media request to take
photographs and video, but then Dotcom spoke, saying he didn't mind
photos or video "because we have nothing to hide." The judge granted
the media access, and ruled that the four would remain in custody
until a second hearing Monday.










Dotcom, Megaupload's former CEO and current chief innovation officer,
is a resident of Hong Kong and New Zealand and a dual citizen of
Finland and Germany who had his name legally changed. The 37-year-old
was previously known as Kim Schmitz and Kim Tim Jim Vestor.

Two other German citizens and one Dutch citizen also were arrested and
three other defendants — another German, a Slovakian and an Estonian —
remain at large.

Megaupload has retained Washington, D.C. power attorney Bob Bennett in
the case, according to a person inside the company. Bennett is best
known for representing former President Bill Clinton during the Monica
Lewinsky scandal. The person within Megaupload spoke on condition of
anonymity because he was not authorized to discuss the company's
plans.

The Electronic Frontier Foundation, which defends free speech and
digital rights online, said in a statement that the arrests set "a
terrifying precedent. If the United States can seize a Dutch citizen
in New Zealand over a copyright claim, what is next?"

The indictment was unsealed one day after websites including Wikipedia
and Wired shut down in protest of two U.S. proposals intended to make
it easier for authorities to go after sites with pirated material,
especially those with overseas headquarters and servers.

Before Megaupload was taken down, the company posted a statement
saying allegations that it facilitated massive breaches of copyright
laws were "grotesquely overblown."

"The fact is that the vast majority of Mega's Internet traffic is
legitimate, and we are here to stay. If the content industry would
like to take advantage of our popularity, we are happy to enter into a
dialogue. We have some good ideas. Please get in touch," the statement
said.

Several sister sites were also shut down, including one dedicated to
sharing pornography files.

Retaliation
News of the shutdown seemed to bring retaliation from hackers who
claimed credit for attacking the Justice Department's and FBI
websites. Federal officials confirmed the Justice Department site was
down for hours Thursday evening, and that the disruption was being
"treated as a malicious act."

A loose affiliation of hackers known as "Anonymous" claimed credit for
the attacks. Also hacked was the site for the Motion Picture
Association of America.

According to the indictment, Megaupload was estimated at one point to
be the 13th most frequently visited website on the Internet. Current
estimates by companies that monitor Web traffic place it in the top
100.








Megaupload is considered a "cyberlocker," in which users can upload
and transfer files that are too large to send by email. Such sites can
have perfectly legitimate uses. But the Motion Picture Association of
America, which has campaigned for a crackdown on piracy, estimated
that the vast majority of content being shared on Megaupload was in
violation of copyright laws.


Elliot Kember / EPA


The New Zealand mansion rented by co-operator of the file-sharing
platform Megaupload, Kim Schmitz, also known as Kim Dotcom.

The website allowed users to download some content for free, but made
money by charging subscriptions to people who wanted access to faster
download speeds or extra content. The website also sold advertising.

Megaupload was unique not only because of its massive size and the
volume of downloaded content, but also because it had high-profile
support from celebrities, musicians and other content producers who
are most often the victims of copyright infringement and piracy.
Before the website was taken down, it contained endorsements from Kim
Kardashian, Alicia Keys and Kanye West, among others.

The company listed Swizz Beatz, a musician who married Keys in 2010,
as its CEO. He was not named in the indictment and, via a
representative, declined to comment.

The five-count indictment, which alleges copyright infringement as
well as conspiracy to commit money laundering and racketeering,
described a site designed specifically to reward users who uploaded
pirated content for sharing, and turned a blind eye to requests from
copyright holders to remove copyright-protected files.

The Justice Department said it was illegal for anyone to download
pirated content, but their investigation focused on the leaders of the
company, not end users who may have downloaded a few movies for
personal viewing.

A lawyer who represented the company in a lawsuit last year declined
to comment Thursday. Efforts by the Associated Press to reach an
attorney representing Dotcom were unsuccessful.

The Associated Press and msnbc.com staff contributed to this report.



Dotcom, Megaupload's former CEO and current chief innovation officer,
is a resident of Hong Kong and New Zealand and a dual citizen of
Finland and Germany who had his name legally changed. The 37-year-old
was previously known as Kim Schmitz and Kim Tim Jim Vestor.

Two other German citizens and one Dutch citizen also were arrested and
three other defendants — another German, a Slovakian and an Estonian —
remain at large.

Megaupload has retained Washington, D.C. power attorney Bob Bennett in
the case, according to a person inside the company. Bennett is best
known for representing former President Bill Clinton during the Monica
Lewinsky scandal. The person within Megaupload spoke on condition of
anonymity because he was not authorized to discuss the company's
plans.

The Electronic Frontier Foundation, which defends free speech and
digital rights online, said in a statement that the arrests set "a
terrifying precedent. If the United States can seize a Dutch citizen
in New Zealand over a copyright claim, what is next?"

The indictment was unsealed one day after websites including Wikipedia
and Wired shut down in protest of two U.S. proposals intended to make
it easier for authorities to go after sites with pirated material,
especially those with overseas headquarters and servers.

Before Megaupload was taken down, the company posted a statement
saying allegations that it facilitated massive breaches of copyright
laws were "grotesquely overblown."

"The fact is that the vast majority of Mega's Internet traffic is
legitimate, and we are here to stay. If the content industry would
like to take advantage of our popularity, we are happy to enter into a
dialogue. We have some good ideas. Please get in touch," the statement
said.

Several sister sites were also shut down, including one dedicated to
sharing pornography files.

Retaliation
News of the shutdown seemed to bring retaliation from hackers who
claimed credit for attacking the Justice Department's and FBI
websites. Federal officials confirmed the Justice Department site was
down for hours Thursday evening, and that the disruption was being
"treated as a malicious act."

A loose affiliation of hackers known as "Anonymous" claimed credit for
the attacks. Also hacked was the site for the Motion Picture
Association of America.

According to the indictment, Megaupload was estimated at one point to
be the 13th most frequently visited website on the Internet. Current
estimates by companies that monitor Web traffic place it in the top
100.










Megaupload is considered a "cyberlocker," in which users can upload
and transfer files that are too large to send by email. Such sites can
have perfectly legitimate uses. But the Motion Picture Association of
America, which has campaigned for a crackdown on piracy, estimated
that the vast majority of content being shared on Megaupload was in
violation of copyright laws.


Elliot Kember / EPA


The New Zealand mansion rented by co-operator of the file-sharing
platform Megaupload, Kim Schmitz, also known as Kim Dotcom.

The website allowed users to download some content for free, but made
money by charging subscriptions to people who wanted access to faster
download speeds or extra content. The website also sold advertising.

Megaupload was unique not only because of its massive size and the
volume of downloaded content, but also because it had high-profile
support from celebrities, musicians and other content producers who
are most often the victims of copyright infringement and piracy.
Before the website was taken down, it contained endorsements from Kim
Kardashian, Alicia Keys and Kanye West, among others.

The company listed Swizz Beatz, a musician who married Keys in 2010,
as its CEO. He was not named in the indictment and, via a
representative, declined to comment.

The five-count indictment, which alleges copyright infringement as
well as conspiracy to commit money laundering and racketeering,
described a site designed specifically to reward users who uploaded
pirated content for sharing, and turned a blind eye to requests from
copyright holders to remove copyright-protected files.

The Justice Department said it was illegal for anyone to download
pirated content, but their investigation focused on the leaders of the
company, not end users who may have downloaded a few movies for
personal viewing.

A lawyer who represented the company in a lawsuit last year declined
to comment Thursday. Efforts by the Associated Press to reach an
attorney representing Dotcom were unsuccessful.

The Associated Press and msnbc.com staff contributed to this report.

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