Two of the men facing extradition to the US over the Megaupload internet piracy case were today granted bail in the North Shore District Court.
However, in spite of being granted bail, Bram van der Kolk, a 29-year-old Dutch national, and Finn Batato, a 38-year-old from Germany, were both remanded in custody for a week while their homes were assessed for suitability for electronic monitoring.
Van der Kolk and Batato were arrested, along with two other Germans, Kim Dotcom, 37, and Marthias Ortman, 40, in a raid on a mansion north of Auckland on Friday as part of a case dubbed the "Mega Conspiracy" by United States law enforcement.
The four men, along with three others, face five charges laid in an indictment by a US grand jury in the state of Virginia, alleging Megaupload breached copyright laws costing copyright owners more than US$500 million (NZ$611m).
Van der Kolk's wife Asia was in the courtroom and said: "I'm just glad my husband is going to be able to play with our baby again."
She was supported in court by a friend, Amber Moltzer, who said the situation had been a "nightmare". "We didn't know what to expect."
Megaupload founder Dotcom lost a bid for bail yesterday, with the judge ruling he was a significant flight risk. He is appealing that decision ahead of attempts by American authorities to extradite him.
A US$2.5m (NZ$3m) discrepancy in the income of Ortmann could see him also remain in custody.
The FBI's calculations on Ortmann's income show he made around US$14.5 million from the company between 2005 and 2010. He made an additional US$3m in 2011.
But his accounts show a total of US$20.2m.
Ortmann was remanded in custody overnight while his lawyer Guyon Foley prepares an affidavit on where the unaccounted for money, approximately US$2.5m, came from.
"That's a massive discrepancy," Judge David McNaughton said. "This is the tipping point for bail, if it's not sorted I'll decline it."
Foley said Ortmann believed the additional income was from trading profits.
"You'd get a bit of interest on $12 million over the years."
Judge McNaughton asked for Foley to file an affidavit and a hearing will be held tomorrow afternoon.
DOTCOM'S FAMILY PARTY AT MANSION
As Dotcom was sent back to jail yesterday, his family partied at their $30m mansion home near Coatesville, a rural community 30km northwest of Auckland.
The lavish party was to celebrate Dotcom's son's third birthday, and around 70 guests were entertained by a clown, bouncy castles and face painting.
To lighten the mood at the mansion, his son's birthday party included a performance by Cornflake the Clown - real name Justin Lane - who performed a 45-minute magic show.
"Everyone was really happy, it was like nothing had happened. It was a normal party," said Lane, who is a party regular at the Dotcom mansion.
"Their son was quite happy and he seemed like he appreciated that this party was for him."
The toddler's party featured bouncy castles, a huge cake, face painting and hundreds of balloons.
Dotcom's wife skipped his bail hearing to be at the party, with Lane saying she seemed "happy" and laughed along with the other guests during his performance.
Dotcom and his wife have two children and she is "heavily pregnant" with twins.
After the gig, Lane wrote on his Facebook page: "Just finished a show for Mr Kim Dotcom's family and friends at the Dotcom Mansion. Very nice people and cool party!"
Lane met Dotcom last year when he provided all the entertainment at the same son's second birthday party.
"He was standing in the back of the room. I perform for the kids but I also include plenty of material for the adults too," said Lane.
"When I was done, Kim introduced himself and he seemed really nice, like he had a sense of humour."
The family paid $280 cash for the 45-minute performance.
Despite cars and equipment being seized from the mansion in the police raid last week Friday, everything appeared "normal" Lane said.
"Everything is still quite flash. There's a huge pool, a huge life-sized statue - it's sort of like a Transformer or Predator - there's a table hockey machine and all the furniture is nice. It's pretty nice."
Dotcom, a New Zealand resident who was previously convicted of hacking and insider trading, has denied any wrongdoing.
The police commissioner has admitted the use of police helicopters in the raid on Dotcom's property "raised eyebrows", but has praised the officers involved.
"The use of two police helicopters and general drama of the operation raised eyebrows, but they were justified by the difficulties we anticipated and met in entering the property," Peter Marshall wrote in a blog on the police national website.
Marshall said the nature of the allegations against Dotcom and his co-accused and the level of international liaison through the FBI and others "make for an extremely interesting case".
- Auckland Now