Inside Kim Dotcom's life of bizarre luxury

DANYA LEVY

Dubbed the Mega Conspiracy, the FBI began its investigation into Megaupload in March 2010, yet the scope of the inquiry reaches back five years.

Court documents released this week show United States authorities accessed emails the seven Megaupload defendants sent in 2009 and Skype conversations dating back to 2007, before Kim Dotcom came to New Zealand two years later.

In New Zealand, police must obtain a High Court warrant to conduct electronic interception and any monitoring is open to scrutiny by the Independent Police Conduct Authority.

In their annual report, police are even required to state how many people were under electronic surveillance: 21 people were monitored in 2010-11, up from 14 the previous year and 23 in 2008-09.

The Government is looking to pass laws this year which would allow police to carry out covert video surveillance.

Last week's dramatic early morning raid on Dotcom's massive $30 million castle-style house, named "Dotcom Mansion", north of Auckland, involved more than 70 police, including the armed offenders squad. It was the result of a mutual legal assistance request to the Foreign Affairs Ministry, which was then passed on to Crown Law, which obtained arrest warrants through the courts.

Police have been quick to stress the FBI played no part in the raid. One police source says FBI staff were back at the North Shore policing centre "armed only with Blackberries".

Police say the FBI carried out no surveillance in New Zealand or behind the back of New Zealand police.

That is because they were able to carry out electronic surveillance of internet activity which occurred in "cyber space".

Author Nicky Hager, who has written about electronic surveillance, says people are unaware that much of the world's internet traffic goes through the US and is "fair game" as soon as it gets there.

That includes Gmail accounts, Skype, and many credit card and online payment companies.

"There's a lot of business which you think of as being here when you log on, but you are actually a micro-second later in the States.

"New Zealanders or anyone using those services have no influence over whether a US law enforcement agency go to a US company with a US warrant and demand the information."

Through The Eyes Of A Former Associate

Until his arrest and remand in custody last week, many New Zealanders had never heard of Kim Dotcom.

The 38-year-old founder of the file sharing company Megaupload is a flamboyant character with a taste for luxury cars and expensive toys, and has been photographed with guns and women in bikinis.

In its case against granting Dotcom bail, the Crown has painted a picture of a reckless man with convictions for hacking and insider trading who defies the law, operates under several aliases and has bank accounts around the world.

However, a former associate describes Dotcom as a hard-working and astute businessman. "You don't form the 13th largest website without being that."

The Auckland-based man did his own digging into Dotcom's business and says he did not believe illegal activities were taking place.

"He's innocent until proven guilty."

Dotcom, who is estimated to have earned $51m last year, was a fun guy to be around and anyone with his financial resources would enjoy the luxuries he and his family have, he says. "He loves beautiful things and to have fun.

"He also loves to watch other people having fun – that's why he shouted Auckland a fireworks display [on New Year's Eve in 2010]."

Dotcom is also a committed family man, the former associate says.

"He loves his kids and will do anything for his kids and his wife."

Football and his homeland Germany are among the things dear to a man said to be deeply passionate.

A large man, who dresses entirely in black, Dotcom's weight appears to have had ramifications on his health; he suffers from diabetes and hypertension and is being treated for a slipped disc.

It prompted his neighbour, US-born lawyer France Komoroski, to this week joke: "I always thought Kim's BMI [Body Mass index] would get him before the FBI did."

The Case Against Dotcom

Dotcom has denied any wrongdoing and through his lawyer has said he has a good defence to the charges against him of copyright infringement and conspiracy to commit racketeering, copyright infringement and money laundering.

Judge David McNaughton said he was in no position to assess the strength of the US case against Dotcom because no evidence had been provided to back its claims illegal activities had cost copyright holders more than US$500m (NZ$609m). The prosecution is not required to produce supporting evidence until the extradition hearing which Judge McNaughton has said was likely to be "some months" away.

Dotcom's lawyer Paul Davison, QC, has described the raid on the mansion, which is also home to Dotcom's wife Mona, who is heavily pregnant with twins, and their three children, as "unnecessarily aggressive and irresponsible". He argued there was no basis for police to anticipate any physical resistance from Dotcom or lack of co-operation.

Judge McNaughton agreed, saying it was the finding of a sawn-off shotgun loaded with a rubber bullet near Dotcom that justified "the scale and strength of the police operation, after the event".

The judge also dismissed claims by the FBI that Dotcom's refusal to stop for an officer during a gumball rally in 2006 while driving at speeds of up to 250kmh was evidence of a blatant disregard for authority. "Further, any suggestion that Mr Dotcom was actively avoiding or resisting arrest by sitting on the floor cross-legged when the police entered the inner panic room and failed to immediately stand and show himself, I dismiss also."

The inner panic room, which was about 20 metres long and contained a safe where the shotgun was found, was installed by the previous owner of the mansion. Mr Davison said the safe was "some distance away" from where Dotcom was found by police and the millionaire had good reason to flee to the panic room. Dotcom feared for the safety of himself and his family and had simply followed "security protocols" in place.

Mr Davison told the court Dotcom's wife was from the Philippines, where kidnapping of rich people and their families was common and such concerns had prompted the Megaupload founder to hire a bodyguard and buy two firearms. Dotcom had not moved to use the shotgun and did not resist arrest although some physical force was used to restrain him.

Despite arguments by his lawyer, and even offering to pay for his own electronic monitoring, Dotcom was refused bail, with Judge McNaughton saying "flight risk remains a real and significant possibility". Dotcom plans to appeal that decision, which could see him in prison for months before an extradition hearing to remove him from the home he once called "a rare paradise on Earth".

- © Fairfax NZ News