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Megaupload Execs Had Thing For Bling, Indictment Shows
The Justice Department Thursday unsealed an indictment in Virginia charging seven executives at file-sharing site Megaupload.com with copyright violations, racketeering, and money laundering. Four of the people charged, including 37-year-old Megaupload CEO and founder Kim Dotcom (aka Kim Tim Jim Vestor, aka Kim Schmitz), were arrested by New Zealand authorities, while the others remain at large.
The feds accused Megaupload of amassing $175 million "in criminal proceeds" since the site was founded in 2005, which they said was used for everything from leasing servers and rewarding uploaders to buying high-end cars and renting yachts. In 2010, according to the indictment, Kim alone earned $42 million, while Mathias Ortmann, a Germany citizen who served as Megaupload's CTO, earned over $9 million.
Having the FBI coordinate international anti-piracy arrests and 18 related domain-name seizures just one day after mass protests against SOPA and PIPA produced a predictable response: The hacktivist collective Anonymous retaliated by launching denial-of-service attacks against 10 websites, including those of the DOJ and FBI, as well as the Motion Picture Association of America, the Recording Industry Association of America, and even the U.S. Copyright Office.
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But it's clear that the feds didn't build their case overnight. Indeed, the DOJ's indictment against what it dubs the "Mega Conspiracy" reflects an investigation that took two years to build.
If convicted of all five charges in the indictment, the defendants face up to 55 years in prison. But Owen Seitel of Idell & Sietel LLP, an entertainment and IP law firm, told VentureBeat that "indictments by their nature are overreaching," and to not expect that all of the allegations would stand up in court. Furthermore, a lawyer for Megaupload told the Guardian that the the company would "vigorously" defend itself.
If the defendants are found guilty of any of the five counts with which they're charged, federal authorities would attempt to recover all assets they'd obtained via illegal activities, or an equivalent dollar amount. As part of the indictment, authorities listed those assets, which include everything from fiberglass sculptures and a jet ski to televisions and Dell servers. Authorities also want to recover $8 million allegedly paid by Megaupload in 2011 solely for Mediterranean yacht rentals. Other interesting assets listed include numerous cars owned by Megaupload's executives, including a Lamborghini, a Maserati, as well as 15 Mercedes-Benzes bearing such license plates as "GOOD," "BAD," "EVIL," "STONED," and "GUILTY," and one Rolls-Royce Phantom bearing the license plate "GOD."
Megaupload billed itself as an online storage locker for movies, music, and other files. For example, in response to an email from a copyright holder in 2007--contained in the indictment--which warned CEO Dotcom that he legally couldn't profit from other people's copyrighted works, Dotcom sent back this message: "We are a hosting company and all we do is sell bandwidth and storage. Not content. All of the content on our site is available for 'free download.'"