The founder and three employees of the Megaupload file-sharing website have appeared in court in New Zealand after being arrested in police raids.
New Zealand police also seized guns, artwork, more than €6 million in cash and luxury cars valued at nearly €3.6 million after serving 10 search warrants at several businesses and homes around the city of Auckland.
The US justice department announced the indictment and arrests of four Megaupload.com executives in New Zealand as debate over online piracy intensifies in Washington where politicians are trying to craft tougher legislation.
New Zealand police earlier raided a mansion in Auckland and arrested Megaupload founder Kim Dotcom, also known as Kim Schmitz (37), a German national with New Zealand residency.
About 70 police, some armed, raided 10 properties and also arrested the website's chief marketing officer, Finn Batato (38); chief technical officer and co-founder Mathias Ortmann (40), both also from Germany; and Dutch national Bram van der Kolk (29), who is also a New Zealand resident.
Vocal critics of the US Stop Online Piracy Act (Sopa) and Protect IP Act quickly showed their opposition to the shutdown of Megaupload.com, with hackers from the Anonymous group attacking the public websites of the Justice Department, the world's largest music company Universal Music, and the two big trade groups that represent the music and film industries.
"The government takes down Megaupload? 15 minutes later Anonymous takes down government & record label sites," a member of Anonymous said via Twitter.
Representatives with the US justice department and the Recording Industry Association of America declined comment on the attacks. Motion Picture Association of America spokesman Howard Gantman said his group was working with police to identify the attackers.
With 150 million registered users, about 50 million hits daily and endorsements from music superstars, Megaupload.com was among the world’s biggest file-sharing sites.
Big enough, according to a US indictment, that it allegedly earned founder Mr Schmitz €32 million last year.
The company is based in Hong Kong and Mr Schmitz was living in New Zealand, but some of the alleged pirated content was hosted on leased servers in Virginia, and allowed US prosecutors to act.
Today, the four defendants stood together in an Auckland courtroom in the first stage of extradition proceedings that could last a year or more.
Mr Schmitz’s lawyer raised objections to a media request to take photographs and video. Mr Schmitz later told the court he did not mind photos or video “because we have nothing to hide”.
The judge granted media access, and ruled the four would remain in custody until a second hearing on Monday.
The Electronic Frontier Foundation, which defends free speech and digital rights online, said in a statement that the arrests set “a terrifying precedent. If the United States can seize a Dutch citizen in New Zealand over a copyright claim, what is next?”.
The indictment was unsealed one day after websites including Wikipedia and Craigslist shut down in protest against two congressional proposals intended to make it easier for authorities to go after sites with pirated material, especially those with overseas headquarters and servers.
Before Megaupload was taken down, the company posted a statement saying allegations that it facilitated massive breaches of copyright laws were “grotesquely overblown”.
“The fact is that the vast majority of Mega’s internet traffic is legitimate, and we are here to stay. If the content industry would like to take advantage of our popularity, we are happy to enter into a dialogue. We have some good ideas. Please get in touch,” the statement said.
Several sister sites were also shut down, including one dedicated to sharing pornography files.
The seized €6 million in cash had been invested in various New Zealand financial institutions, and has been placed in a trust pending the outcome of the cases.
Police spokesman Grant Ogilvie said the seized cars include a Rolls-Royce Phantom Drophead Coupe worth €312,000.
Two short-barrelled shotguns and a number of valuable artworks were also confiscated.
According to the indictment, Megaupload was estimated at one point to be the 13th most frequently visited website on the internet. Current estimates by companies that monitor web traffic place it in the top 100.
Megaupload is considered a “cyberlocker”, in which users can upload and transfer files that are too large to send by email.
Such sites can have legitimate uses. But the Motion Picture Association of America, which has campaigned for a crackdown on piracy, estimated that the vast majority of content being shared on Megaupload was in violation of copyright laws.
The website allowed users to download some content for free, but made money by charging subscriptions to people who wanted access to faster download speeds or extra content. The website also sold advertising.
Megaupload was unique, not only because of its massive size and the volume of downloaded content, but also because it had high-profile support from celebrities, musicians and other content producers who are most often the victims of copyright infringement and piracy.
Before the website was taken down, it contained endorsements from Kim Kardashian, Alicia Keys and Kanye West, among others.
The company listed Swizz Beatz, a musician who married Keys in 2010, as its chief executive. He was not named in the indictment and declined to comment.
The five-count indictment, which alleges copyright infringement as well as conspiracy to commit money-laundering and racketeering, described a site designed specifically to reward users who uploaded pirated content for sharing, and turned a blind eye to requests from copyright holders to remove copyright-protected files.
For instance, users received cash bonuses if they uploaded content popular enough to generate massive numbers of downloads, according to the indictment.
Such content was almost always copyright-protected, the indictment said.
Reuters/AP
