Megaupload attempting to get back online

KIRSTY JOHNSTON
Last updated 13:00 21/01/2012
Reuters

Police in New Zealand raid a luxury mansion and arrest Megaupload founder Kim Dotcom as the US pushes ahead with its war on copyright piracy.

Dotcom
PETER MEECHAM/Fairfax NZ Zoom
A motorbike is taken away from the mansion seized from piracy-accused Kim Dotcom.
KIM SCHMITZ
Reuters
ARRESTED: Internet millionaire Kim Schmitz in 1999.
Coatesville Mansion
LAWRENCE SMITH/Fairfax NZ
MANSION: Police and investigators at the Coatesville mansion.

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Website Megaupload.com, which was shut down by authorities over allegations that it illegally peddled copyrighted materials, is trying to get back online as its founder sits in an Auckland jail.

Police arrested Kim Dotcom, 37, in an early morning swoop yesterday at his $30 million rented mansion in Coatesville, 30km north of Auckland.

Dotcom and three others - Finn Batato, 38, and chief technical officer and co-founder Mathias Ortmann, 40, both from Germany, and Dutch national Bram van der Kolk, 29 - appeared in the North Shore District Court yesterday.

The men, three others, and two corporations face charges relating to alleged violations of piracy laws worth hundreds of millions of dollars. They were indicted by a US grand jury in the state of Virginia.

The charges include racketeering and money laundering, and allege that cash was poured into New Zealand funds and banks by members of the so-called "Mega Conspiracy".

Megaupload's lawyer Ira Rothken said the company would "vigorously defend itself" as the site simply offered online storage.

"The company is looking at its legal options for getting back its servers and its domain and getting its servers back up online," he said.

"It is really offensive to say that just because people can upload bad things, therefore Megaupload is automatically responsible."

No decision has been made yet about whether they will fight extradition from New Zealand to the United States, he said.

Website, NPR.org, today reported that Megaupload appeared to be trying to get back on line, reporting that an online page with no domain name had appeared with the message, "This is the NEW MEGAUPLOAD SITE! we are working to be back full again."

Police finished searching Dotcom’s mansion just before midnight after seizing a variety of equipment including computers and documents for evidence.

Some of the larger items remained at the property and it would be removed in the coming days.

Police said they also found two firearms at the house, and a 55-year-old New Zealand man was charged with unlawful possession of a pistol.

He was released on bail and was due to reappear in court on January 26.

Detective Inspector Grant Wormald, of OFCANZ, said police would continue working on the case through the weekend.

''Our focus now is on completing all the documentation required by Crown Law ahead of the next court appearance on Monday.

''The team of four FBI staff will also remain working with us for the next few days.''

Police yesterday arrived at the mansion in two marked helicopters, but Wormald said it was "a less than straight-forward entry" into the mansion.

"Despite our staff clearly identifying themselves, Mr Dotcom retreated into the house and activated a number of electronic locking mechanisms.

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"While police neutralised 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 Mr Dotcom near a firearm which had the appearance of a shortened shotgun.

"It was definitely not as simple as knocking at the front door," Mr Wormald said.

The US Justice Department and the FBI, who led the crackdown, said the accused's website Megaupload.com and other related sites generated more than US$175m (NZ$217m) in criminal proceeds and caused copyright holders more than US$500m (NZ$623m) in lost revenue from pirated films and other content.

The US indictment paints a picture of a sprawling multi-national operation, with more than 20 search warrants executed in nine countries, including New Zealand and the US.

When he appeared in North Shore District Court yesterday alongside three of his co-accused, Dotcom, a flamboyant German computer hacker who has past convictions from his home country, said he "had nothing to hide".

"We don't mind if there's press coverage if people want to photograph us, let them," he said, overriding his lawyer, Auckland QC Paul Davison.

Possessions taken from Dotcom's Coatesville mansion provided a hint of the accused men's extravagant lifestyles. Eighteen luxury cars worth a combined $6m were taken from the site, including a 2008 Rolls-Royce Phantom Drop Head Coupe, with the licence plate GOD, and a 1959 pink Cadillac. Others including Mercedes Benz, a Maserati and a Harley Davidson motorbike with licence plates including POLICE, STONED, GUILTY and MAFIA.

Also seized were giant screen TVs and works of art, US$175m (NZ$218m) in cash, the contents of 64 bank accounts world-wide, including BNZ and Kiwibank accounts in New Zealand, Government bonds and money from numerous PayPal accounts.

Police said last night up to $11m in cash was restrained in various accounts.

The mansion, which is reportedly worth as much as $30m and was built by the founders of the Chrisco empire, Richard and Ruth Bradley. When they moved to Sydney in 2008 the mansion was put up for sale.

Dotcom had been renting the property and reportedly tried to purchase it last year but was turned down because of overseas criminal convictions.

Despite that setback, Dotcom maintained an extraordinary public profile, funding a huge New Year's Eve fireworks display over Waitemata Harbour in 2010 and commenting publicly on his charitable giving, including to the victims of the Christchurch earthquake and the Starship Foundation in Auckland.

In a recent online missive Dotcom wrote about his life in New Zealand, saying how he heard local singer Gin Wigmore on the radio and wanted her to record the "Mega Song".

With a casual mention of how he was "chilling in the studio" with the Black Eyed Peas, he said Wigmore took the offer, came to the studio in Auckland, and nailed the song in three takes.

"The following day I received a call from her manager telling me we couldn't use Gin's voice," he said.

The lawyers allegedly didn't want Wigmore associated with a hacker, which Dotcom wrote was in the past.

"My mistake was that I embraced the media and gave them the stories they wanted. Let's just put this into the category 'young and stupid'. I was giving them a glimpse into my exclusive lifestyle. For this openness I was turned into the scapegoat."

The arrests were the result of several months' co-ordination with the FBI and US Department of Justice.

"The FBI contacted New Zealand police in early 2011 with a request to assist with their investigation into the Mega conspiracy," Mr Wormald said.

"We were happy to provide this assistance. Staff from OFCANZ and New Zealand police have worked with the US authorities over recent months to effect today's successful operation.

"All the accused have been indicted in the United States. We will continue to work with the US authorities to assist with the extradition proceedings," he said.

The four were denied bail and will reappear on Monday when the extradition case will continue.

Charges would not be laid in New Zealand as the matter was being dealt with internationally, he said.

The operation led to hackers attacking the public websites of the US Justice Department, the world's largest music company Universal Music, and the two big trade groups that represent the music and film industries.

"The government takes down Megaupload? 15 minutes later Anonymous takes down government & record label sites," a member of Anonymous said via Twitter.

HOW MEGAUPLOAD ALLEGEDLY WORKS

Megaupload has boasted of having more than 150 million registered users and 50 million daily visitors, according to the FBI indictment. At one point, it was estimated to be the 13th most frequently visited website on the Internet.

Users could upload material to the company's sites which then would create a link that could be distributed. The sites, which included video, music and pornography, did not provide search capabilities but rather relied on others to publish the links, the indictment said.

Users could purchase memberships to the site to obtain faster upload and download services, the primary source of revenue. Material that was not regularly downloaded was deleted and financial incentives were offered for popular content, according to the charges.

The web page with the link to the copyrighted material would include advertisements, another source of revenue.

If copyright holders complained about a specific link to the website, prosecutors said Megaupload.com would remove that link, but scores of others existed to the same material, according to prosecutors.

Other material found uploaded included child pornography and terrorism propaganda videos, according to the indictment. The US government's investigation began in March 2010.

-Fairfax NZ, with Reuters

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