Mega Saga: Dotcom, Kingpins of Piracy on Trial

Michael In the News

After years of successful delay, the three Megaupload executives finally began their extradition hearing in September. Up until this point the quartet in New Zealand were able to delay for over three years. They tangled the case up in technicalities and arguments about the United State Department of Justice’s legal standing for seizing hundreds of millions of dollars in assets.

Dotcom Dodging the DOJ

Originally federal investigators arrested four men. They were able to get another man, Andrus Nõmm, to plead guilty after losing his extradition case in the Netherlands. He was sentenced to a year in prison in February of this year for felony copyright infringement during his role as Megaupload’s programmer. In his guilty plea, Nõmm admitted “that the harm caused to copyright holders by the Mega Conspiracy’s criminal conduct exceeded $400 million. He further acknowledged that the group obtained at least $175 million in proceeds through their conduct. had claimed that, at one time, it accounted for four percent of total Internet traffic…”

Surprisingly, all of the court proceedings dealing with Kim Dotcom (born Kim Schmitz) and the 3 other holdouts have dealt solely with the issue of extradition. Part of the fight that Dotcom has put up is that because all of his international assets were seized he cannot afford a legal battle that is both complicated, international, and against one of the strongest governments in the world. Since his arrest, the victories for Kim and the DOJ have gone back and forth like a proverbial volleyball match: every other motion the government won, Dotcom would be successful in a rebuttal- and vice versa.

For the past two weeks the prosecutor, Christine Gordon a New Zealand attorney representing the US DOJ’s interest to extradite Kim Dotcom and his colleagues, has laid out their case. The accusations are Dotcom and his associates; Mathias Ortmann, Bram van der Kolk, and Finn Batato, knowingly conducted criminal activity and fraud worth an upwards of half a billion dollars from the copyright industry. In Gordon’s words;

They deliberately introduced copyright-infringing material to their website. They deliberately preserved that material. They deliberately took steps to profit from that material, and made vast sums of money.

You’ve Said Too Much

Perhaps the biggest nail in the coffin for the Megaupload execs is their own words captured via Skype logs and internal emails retrieved from devices seized by the DOJ. All four defendants were able to be quoted saying some damning stuff: refrencing ‘infringing material’ and how important those videos were to their bottom line.

In an ironic case of foreshadowing, Dotcom states to one of the co-accused, “At some point a judge will be convinced about how evil we are and then we’ll be in trouble. We have to make ourselves invulnerable,” continuing, “…Don’t log our chats. Too much shit in there.”


In another email Van der Kolk told Dotcom, “If copyright holders would really know how big our business is they’d surely try to do something against it. They have no idea we are making millions in profit every month.”

Beyond that, prosecutor Gordon accuses the company of not only knowingly committing copyright infringement to the tune of $175 million in profits but also encouraging their uploaders while giving DMCA notice issuers the run around. In court she said, “They knew that they paid rewards for specific copyright-infringing material and in some cases they communicated with the rewards claimants and helped and encouraged their activities by giving them special privileges.”

The prosecution rested on October 1st, leaving the ball in the defense’s court starting Monday. Presumably, we haven’t heard but just a portion of the evidence the DOJ was able to amass over the past 3 years as this isn’t even the main event. The judge, Nevin Dawson, does not have to decide if the defendants are guilty he only has to decide whether there is a substantial enough case against them to warrant extradition.

The Price of Prosecution

The cost of prosecuting this case has been astounding so far. Which is presumably exactly what Dotcom and his colleagues wanted. They probably hoped that if they made the case as costly and time consuming as possible that they would eventually be let off the hook. It seems that is highly unlikely- but not for lack of making the case both extremely expensive and time consuming.

The case, still in its infantile stages, has been delayed 10 times for a total of 3 years and 10 months. The New Zealand Herald recently did an expose where they broke down the numbers surrounding the case- and they are dumbfounding.

In the 1337 days from the initial raid to the start of the trial NZ lawyers put in 29,334 man hours into the case- taxpayer funded no less. This is just shy of having a single lawyer working around the clock everyday since the raid. Using base rates of the NZ Crown’s laywers of $198 per hour the case has cost $5.8 million.

This is especially astounding when you consider that NZ spent a total of $11.5 million all of last year on criminal prosecutions in Auckland (the city where the hearings are being held).

It’s estimated that Kim Dotcom has spent $10 million on his defense. Finn Batato, Megaupload’s sales director, however, can’t afford legal representation and will be representing himself.

Since the raid, Batato has married and grown as a father for their two kids. He never expected the case to be this involved, saying, “It can’t drag on indefinitely. Maybe another two years, if not more. I don’t dare to predict any timings any more. I never thought it would take this long.”

Even though the US DOJ, and thus the copyright industry, might win the right to extradite the Megaupload execs (and if they do, surely win again in the US) I am failing to see any winners in the grand scheme of things.

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