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Co-Founder Of Megaupload Arrested For Copyright Infringement And Money Laundering

By Bashian & Papantoniou
January 26, 2012

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Kim Dotcom, computer programmer and co-founder of Megaupload, was arrested for charges of copyright infringement and money laundering. Dotcom – born Kim Schmitz in Germany but a legal resident of both Finland and New Zealand – became notorious for his abilities as a computer hacker and has been convicted of insider trading, and embezzlement in the past. Megaupload is a Hong Kong-based internet company established in 2005 that ran a number of online services related to file storage and sharing. In essence, it is alleged that Megaupload operating as an organization dedicated to copyright infringement, costing copyright holders more than $500 million in lost revenue from pirated films and other media. Dotcom and 4 of his associates were arrested in New Zealand at his rented multi-million dollar mansion, which has been reported as the most expensive in the country. In a multinational law enforcement effort, New Zealand authorities were cooperating with the FBI, U.S. Justice Department, Hong Kong Customs, the Hong Kong Department of Justice, the Netherlands Police Agency and the Public Prosecutor’s Office for Serious Fraud and Environmental Crime, London’s Metropolitan Police Service, Germany’s Bundeskriminalamt and the German Public Prosecutors, the Royal Canadian Mounted Police and the Canadian Department of Justice. Concurrent with his arrest, authorities seized a number of bank accounts, PayPal accounts, a Rolls-Royce, a rare Lamborghini, a Maserati and fifteen Mercedes-Benz vehicles. Most were adorned with creative license plates including with the license plate “GOD,” “HACKER,” “POLICE,” “STONED,” “GOOD,” “CEO,” and the ominous “GUILTY.” Even more notable, the indictment alleges that Megaupload or its officers spent almost $8 million on yacht rentals in the Mediterranean during the months of April through June of 2011 alone. The arrest has brought to the forefront the future of global action to prevent internet piracy. Recently, two pieces of controversial anti-piracy legislation, the Protect IP Act (PIPA) and the Stop Online Piracy Act (SOPA), have been introduced in Congress as a means of providing a check on copyright infringement on the internet. In response, several websites, including Wikipedia, went “dark” for twenty-four hours to protest the legislation. The uproar over PIPA and SOPA has led to the Obama Administration’s declaration that both bills would not be passed in their current state, as the government would not support any anti-piracy legislation that facilitates online censorship.  However, anti-piracy remains a hot-button issue and the arrest of Kim Dotcom does not bode well for those opposed to this latest round of internet regulation.
Category: Criminal Defense

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