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Fraud Management & Cybercrime , Governance & Risk Management

Megaupload Founder Kim Dotcom Can Be Extradited

Dotcom Says He Will Appeal New Zealand High Court Ruling
Megaupload Founder Kim Dotcom Can Be Extradited
Dotcom pictured at a political rally in 2014. Photo: William Stadtwald Demchick (Creative Commons).

Kim Dotcom, the gregarious founder of the Megaupload file-sharing service, is vowing to fight a New Zealand High Court decision that has found him and three colleagues still eligible for extradition to the U.S. The decision means more court wrangling in an already long-running case.

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The High Court found on Feb. 20 that Dotcom and his colleagues can't be extradited for distributing copyright-protected work because it's not a criminal offense under New Zealand law, a requirement under the U.S.-New Zealand extradition treaty.

But the court found another U.S. charge - conspiracy to commit copyright infringement - has a New Zealand equivalent, conspiracy to defraud. Even beyond that finding, there are "other extradition pathways are available for all counts," according to explanatory notes released by the court. The 363-page ruling largely upholds a District Court decision from December.

Dotcom, Finn Batato, Bram Van Der Kolk and Mathias Ortmann, were indicted in U.S. District Court in Eastern Virginia in 2012 on charges of criminal copyright infringement, money laundering, and racketeering and wire fraud.

Prosecutors contend Megaupload collected $175 million in subscription revenue and advertising by turning a blind eye to the trading of material under copyright protection. Megaupload maintains that it removed links that were found to infringe, similar to the practices of other cloud-service providers.

Dotcom and his colleagues plan to appeal the ruling, says his New Zealand lawyer, Ron Mansfield. "Whether our law should still permit him to be extradited to the United States under an act that has no interest in copyright is the question that remains now to be answered by our courts," Mansfield says. "We say no and we are confident that this must be right."

On Twitter, Dotcom writes: "Don't worry. Be happy. I'll never be extradited."

Long-Running Drama

The Megaupload case is one of the best-known and perhaps longest running copyright infringement cases. It marked the first time U.S. prosecutors charged a cloud-service provider with criminal copyright infringement.

Dotcom's formerly high-rolling lifestyle and continued defiance likely have fueled prosecutors' zeal. When his home was raided in January 2012, law enforcement officers seized luxury cars and terabytes of data, while at the same time freezing millions of Megaupload's funds.

Throughout the case, Dotcom has notched several victories and hasn't been bashful about aggravating his foes. In one of the first battles in mid-2012, New Zealand's District Court ruled that U.S. prosecutors should turn over more evidence related to the charges.

Dotcom turned to Twitter. He crafted a message for the Motion Picture Association of America, including a link to a drawing of a finger pointing at a viewer with the all-caps message, "LOSER." The tweet was deleted at some point.

His case also exposed a glaring mistake by New Zealand's spy services. The country's equivalent of the U.S. National Security Agency, the Government Communications Security Bureau, assisted police by spying on Dotcom.

The agency was unaware he was a permanent resident, which means it was violating rules on the surveillance of citizens and legal residents. Dotcom apparently wasn't the only one who was illegally spied upon, adding momentum to a movement to rewrite the country's surveillance rules (see New Zealand Spy Law Rewrite Sparks Concerns).

War on Pirates

The entertainment industry's calculations of its losses from piracy have always been exorbitant, and it's difficult to believe that those who were pirating content would have ever paid for it.

Nonetheless, the industry is still waging a lengthy legal war on piracy. It has been somewhat successful in hampering some of the most flagrant and obvious sources for copyright-protected content.

In Australia, for example, the Federal Court in December ordered that ISPs block The Pirate Bay, the bittorrent search engine, as well as four other bittorrent sites, according to ABC.

But as with any attempt to restrict content on the internet, there's usually a workaround. The Pirate Bay can still be accessed from Australia using a VPN, which encrypts traffic from a computer to an external provider, making it unreadable to the ISP in between.

It's impossible to completely eliminate file sharing, particularly among more sophisticated users using a combination of encryption and hidden .onion websites. But for those more knowledgeable users, there's a also security risk: Free software or other files have often been used as a Trojan horse to deliver malware, which is reason enough to stay away.

About the Author

Jeremy Kirk

Jeremy Kirk

Executive Editor, Security and Technology, ISMG

Kirk was executive editor for security and technology for Information Security Media Group. Reporting from Sydney, Australia, he created "The Ransomware Files" podcast, which tells the harrowing stories of IT pros who have fought back against ransomware.

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