MegaUpload Founder Granted Bail
February 22, 2012

MegaUpload Founder Granted Bail

The US Department of Justice failed in its attempt to keep MegaUpload founder Kim Dotcom in jail on Wednesday when a New Zealand court released him on bail and instead put him under house arrest, according to various media reports.

The court ruled that Dotcom would not likely have the means to flee because his funds had been seized. US lawyers have yet to file extradition paperwork with the New Zealand court, but have until March 2 to do so, a spokesman for the US Attorney´s Office told CNET.

An elated Dotcom, German-born founder of file-sharing website MegaUpload, told reporters he was happy to be able to return home to his family. “I hope you understand that that is all I want to say right now,” he said as he left court, escorted by supporters and lawyers.

The US Department of Justice has been seeking to bring Dotcom and three other MegaUpload employees to the US to stand trial for alleged copyright infringement violations, racketeering, and money laundering.

Dotcom and his employees were arrested by new Zealand police last month along with millions of dollars in cash and property belonging to the four men. US officials say this is the biggest Web piracy case ever brought.

The defendants´ lawyers say the men are innocent, arguing that even if they were guilty of what they are accused of, copyright violations are not criminal offenses. The lawyers also said the charges aren´t enough to extradite Dotcom from New Zealand.

Dotcom, originally indicted on five counts back on January 5 and arrested on January 20, was charged with additional criminal copyright charges late last week, including a charge that the four defendants committed wire fraud.

Karen Gullo, a reporter for Bloomberg, said Sunday that Dotcom was hit with three new copyright-related counts and five counts of wire fraud related to “allegedly running an illegal enterprise for five years that unlawfully copied works and made them available for download to customers.”

US officials charge that MegaUpload has cost copyright owners and songwriters more than $500 million in damages by facilitating millions of illegal downloads through its company.

Some of the new copyright charges stem from allegations that MegaUpload copied YouTube´s video library in 2006. According to a CNET report there were email communications between MegaUpload company managers about copying YouTube´s entire video collection.

Under the Digital Millennium Copyright Act, service providers are not responsible for infringing acts committed by its users, Dotcom´s lawyers argued. However, the email conversations appeared to show that MegaUpload did upload pirated material. The DMCA doesn´t protect service providers from direct copyright infringement.

Officials also found, when filing the new charges, evidence that the company´s alleged claims of 180 million registered users were false. They said that a search of the company´s computer systems only turned up around 66 million users, of which only 5.86 million had uploaded files. That number indicates that more than 90 percent of the registered users had nothing of their own stored on MegaUpload´s servers.

Dotcom´s US lawyer, Ira Rothken, a long-time defender of Websites accused of copyright violations, was unimpressed with the new charges and maintains it will not change one important fact.

“There is no secondary infringement or Grokster-type inducement liability under criminal law,” he told CNET. “This is at best a civil case and should be tried in civil court, without policemen and raids and asset seizures...At some point, somewhere, we [DotCom and the other defendants] will walk out of court and go for coffee. Some judge will take a look at this and they´ll be free.”

Dotcom may be free from the constraints of bars, but it doesn´t mean he is a free man. Under the bail conditions, he must live in a small house near his rented mansion and wear an electronic tag. He will be restricted on how far he can travel, and the Ministry of Justice judge ordered that no helicopters will be allowed to fly over or land on the property.

He was granted bail after the judge said a review of the facts and Dotcom´s circumstances showed there was no evidence he was a flight risk.

Earlier this month, the High Court had upheld a lower court judge´s ruling that there was a major risk, Dotcom, who had multiple passports and bank accounts in three names, might flee the country.

But Judge Nevin Dawson on Wednesday said that those risks are no longer a problem, as his finances have been seized, and being a wealthy man was not sufficient reason to continue to hold him.

Dotcom told the court that with his assets frozen and business shut down, he had no intention of trying to flee the country, most likely to Germany, where he would be safe from extradition.

Dotcom was born Kim Schmitz but has legally changed his name to Kim Dotcom. He has also gone by the alias Kim Tim Jim Vestor. He is a citizen of both Germany and Finland and was granted New Zealand residency in 2010. The MegaUpload company is registered in Hong Kong.

The other three men in the case were granted bail earlier.


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