Advertisement

Megaupload founder held in N. Zealand, home raided

New Zealand police seized a treasure trove of luxury goods from the founder of file-sharing site Megaupload.com Friday as four suspected Internet pirates wanted in the United States appeared in court. Armed officers swooped on an Auckland mansion occupied by "Kim Dotcom", whose website was shut down by US authorities on Thursday accusing it of one of the largest cases of copyright theft ever. The police seized luxury cars worth NZ$6.0 million ($4.8 million), including a 1959 pink Cadillac and a Rolls Royce Phantom, as well as "a firearm which had the appearance of a shortened shotgun". NZ$11 million in cash held in New Zealand financial accounts was also frozen pending the outcome of legal proceedings, police said. Dotcom, also known as Kim Schmitz, a 37-year-old German citizen with New Zealand and Hong Kong residency, was denied bail with three other men on Friday when they appeared in an Auckland district court, police said. He had tried to evade capture by hiding behind an elaborate network of electronic defences in his mansion. The dramatic raids came after Megaupload went offline as US officials and the Federal Bureau of Investigation detailed what they described as "among the largest criminal copyright cases ever brought by the United States". Washington wants to extradite the Auckland quartet to face prosecution for online piracy, on charges of racketeering and money-laundering that could carry jail time of up to 20 years. The Justice Department and FBI indicted a total of seven people who they said were "responsible for massive worldwide online piracy of numerous types of copyrighted works, through Megaupload.com and other related sites". The accused generated more than $175 million in criminal proceeds and caused more than $500 million in harm to copyright owners by offering pirated copies of movies, TV programmes and other content, according to a statement. The indicted seven, all European, include the four arrested in New Zealand. The other three remain at large. Megaupload itself is registered in Hong Kong, but checks by AFP appeared to show only a shell company with a post office box address in the Chinese city. The dramatic raids came amid a fierce debate in the United States over a proposed bill before Congress aimed at cracking down on online piracy. Critics say the new law would hand US authorities unprecedented powers that could impinge on the freedom of the Internet, and on Wednesday dozens of websites led by Wikipedia went dark in a rare protest. In face of the criticism, US Senator Majority Leader Harry Reid Friday agreed to delay next week's vote on the bill to allow more time for talks. "We made good progress through the discussions we've held in recent days, and I am optimistic that we can reach a compromise in the coming weeks," he said. The European Union's top Internet official Neelie Kroes also criticised the planned US legislation on Friday writing on Twitter that: "Internet regulation must be effective, proportionate & preserve benefits of open net." "Speeding is illegal too: but you don't put speed bumps on the motorway," she added. The prosecution of Megaupload meanwhile sparked a retaliatory cyber attack on the FBI and Justice Department websites. The two government sites were up and running again early Friday after being shut down for several hours in the attack claimed by the "Anonymous" hacktivist group, which also briefly disabled music and recording industry websites. Megaupload is popular with Hollywood celebrities and has been endorsed by music stars such as Kanye West. It was also reported Thursday that Swizz Beatz, a music producer married to the singer Alicia Keys, was its chief executive. Beatz, whose real name is Kasseem Dean, was not named in the indictment. Megaupload Ltd. and another company, Vestor Ltd., were indicted by a grand jury in Virginia and charged with racketeering conspiracy, copyright infringement and conspiring to commit money laundering. Vestor's sole shareholder is Kim Dotcom, who was named as a resident of Hong Kong and New Zealand. His six fellow accused come from Estonia, Germany, the Netherlands and Slovakia.