Megaupload founder has been released on bail

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feb,23,2012 

Kim Dotcom, the millionaire founder of the file-sharing website Megaupload, was released on bail Wednesday after a judge said he didn't appear to have enough money to flee.

Under one of the largest anti-piracy crackdowns ever, the U.S. Department of Justice is seeking to have Dotcom, also known as Kim Schmitz, and three co-workers extradited to face charges including conspiracy to commit racketeering and conspiracy to commit copyright infringement.

Last month, U.S. authorities shut down Megaupload's websites and announced indictments against Dotcom and six other people connected to the site, accusing them of operating an "international organized criminal enterprise responsible for massive worldwide online piracy of copyrighted works."

They say Megaupload generated more than $175 million in illegal profits through advertising revenue and the sale of premium memberships.

The New Zealand police arrested Dotcom, a German citizen who has residency in New Zealand and Hong Kong, and the other three at the U.S. government's request.

Megaupload's lawyers have denied the charges, and online activists have rallied to the site's defense.

An initial effort by Dotcom's lawyers to obtain bail last month was denied, with the judge at the time concluding that flight risk remained "a real and significant possibility."

But on Wednesday, District Judge N.R. Dawson said that "fresh and new" information had emerged since and that there was no longer "just cause" to keep Dotcom in custody, providing satisfactory bail conditions were imposed.

In his 13-page decision, Dawson noted that:

-- Megaupload's chief financial officer has filed an affidavit supporting Dotcom's contention that he has no money to flee;

-- He has only two passports (one Finnish and one German), not three, as previously asserted;

-- The United States has extradition treaties with Germany and Finland;

-- No steps have been taken to re-establish the shuttered business;

-- No new evidence has been uncovered;

-- Some of Dotcom's business associates facing the same charges have been granted bail;

-- An extradition hearing likely will not occur before July, an "effectively punitive" period of time, despite the fact that no criminal conduct has been established.

Dotcom's release on bail comes after the U.S. authorities added charges and broadened their case against the defendants last week.

The other charges that the accused face include conspiracy to commit money laundering and criminal copyright infringement.

Dotcom holds a German passport and two Finnish passports, under the names of Kim Tim Jim Vestor and Kim Dotcom. Prosecutors had said that the multiple passports, as well as bank accounts and credit cards from various countries linked to different names, showed that he presented a flight risk.

But Dawson was unswayed.

Dotcom "legally changed his name on two occasions and each passport was obtained in his legal name at that time," the judge wrote. "It is the applicant's understanding that the first Finnish passport in the name of Vestor would have been canceled when he applied for a new passport from Finland in the name of Dotcom. Suprisingly, no inquiries have been made of the Finnish authorities to confirm this."

In addition, Dotcom "is entitled to hold both his German passport and his Dotcom Finnish passport," he said.

Dawson said Dotcom, at the time of his arrest, had 59 credit or bank cards under 13 names in his possession, 21 of them still valid. But the judge said Dotcom's possession of so many expired cards could indicate no more than "a degree of muddlement" in his financial affairs.

The 38-year-old businessman has prior convictions related to computer hacking and insider trading. But Dawson noted that they were "historical," with some of them dating to his teenage years.

Dotcom obatined residency status in New Zealand in December 2009. He is married to a Filipina woman with whom he has three children, and his wife is pregnant with twins.

"The factors against him being a flight risk include that he would live his life as a fugitive, he would be abandoning his expectant wife and three children and he would effectively lose all the considerable assets and bank accounts in a number of countries that have been seized or frozen," Dawson wrote. "It is submitted that he has a good defense to the charges and that he has every reason to stay and fight for his family's future and his seized assets."

The arrests of Dotcom and his co-workers, along with the closure of Megaupload, prompted an angry reaction from the activist hacking collective Anonymous. After the prosecution was announced, the group took credit for temporarily crippling the U.S. Department of Justice, FBI and entertainment company websites.

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