Mega Saga: The Journey of Kim Dotcom

Michael In the News

If you have been a part of the bittorrent or P2P scene in the last 5 years or so, chances are you have heard of or one of its nearly two dozen sister sites.

If you haven’t heard of, for whatever reason, it’s a Hong Kong based company owned by a German resident of New Zealand that hosted online services that specialized in file storage and viewing.

It was forcibly shut down in early 2012 by the FBI.

The Beginning

After an indictment on January 5th by a Grand Jury in Virginia, the FBI carried out over 20 search warrants in eight different countries. They claimed that megaupload and sister sites had cost Hollywood over $500 million in damages and produced $175 million in criminal proceeds.

They arrested four men in New Zealand, including the owner- Kim Dotcom in a rented $30 million mansion. At the same time, authorities seized $67 million in assets. In addition to being seized and shut down the Department of Justice (DOJ) also shut down 17 other related sites:,,,,,,,,,,,,,,, and

Ironically, just weeks before all of this took place Kim Dotcom (born Kim Schmitz) told TorrentFreak, “Mega has nothing to fear. Our business is legitimate and protected by the DMCA and similar laws around the world. We work with the best lawyers and play by the rules. We take our legal obligations seriously. Mega’s war chest is full and we have strong supporters backing us.”

It’s been over three and half years now, and the case is still in limbo, no trial has started and the case progresses as slowly as ever.

The Struggle

The battle ever since that initial day in January has been tit for tat. With every victory the DOJ had, Kim Dotcom’s appeals won a victory of their own.

The DOJ followed up its seizure by asking for a complete forfeiture of Kim Dotcom’s assets because of his ‘fugitive’ standing. The DOJ’s stance was that Kim Dotcom and the co-accused are fugitives because they are declining to be extradited to the US to stand trial. Attorney Dana Boente says that fugitives are fugitives “…regardless of the reason for their opposition [to being extradited].”

But Ira Rothken, one of Kim Dotcom’s lawyers said, “A person who has never been to the United States and is currently going through a lawful procedure in New Zealand shouldn’t be seen as a fugitive.”

And I’d have to agree.

This battle of fugitive vs. non-fugitive is very important because if he is seen as a fugitive then his assets remain frozen. He can’t support his family, pay rent, or- just as important- pay astronomical legal fees for fighting an international case.

Indeed, the US did win the forfeiture fight in March of this year. Taking full legal control of all $67 million of his assets leaving Kim to say, “It all belongs to the U.S. government now. No trial. No due process.”

In his appeals, however, Kim Dotcom has recently won a small victory. In May of this year, through the New Zealand courts, Kim is now able to access $128,000 (US) a month to pay for legal fees and living expenses.

However, this doesn’t help much with fighting the legal battle in the US, the money is still seen as criminally obtained. Because of this, “Our US lawyers are still bound by the US forfeiture judgment and won’t be allowed to accept funds from my unfrozen assets without a significant risk to them, unless the US government allows that, which is unlikely. But we have appealed the US Forfeiture judgment in the US and the team is optimistic that we will prevail.”

This part of the forfeiture was recently appealed in the US on July 1st, and is awaiting a decision.

And that’s where the case currently stands. Over three years and the battle is raging as to whether the defendant can use his own money to defend himself.

The extradition hearing is set for this September.

The Issues

US District court judge, Liam O’Grady stated, “I frankly don’t know that we are ever going to have a trial in this matter,” after finding out that the Kim Dotcom had never been formally served with criminal indictment papers by the US.

And that about sums up the case.

If this case goes in favor of the US DOJ then the precedent it will be setting is, well, unprecedented. The US has already over stepped boundaries by seizing and shutting down websites, and gaining control of millions of dollars of a foreigner’s assets with little to no due process.

They have also abused the powers given by the fugitive disentitlement doctrine on the grounds that Kim and the co-accused are (lawfully) protesting extradition.

Megaupload was a hugely popular, gargantuan website when it was shut down. It had nearly 83 million unique visitors, 50 million visits per day, and over 1 billion page views.

It seems as though the US is desperate to nab at least one big fish with recent events highlighting that the fight against piracy is not working.

The saga continues…

feature image courtesy of John Trainor via Flickr

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