How New Zealand Became The Centre Of The Megaupload Takedown

In early 2011, the FBI contacted New Zealand police. It wasn't a casual call to catch up on international policing issues - the FBI wanted the New Zealand police force's help in bringing down what it claimed was a "Mega Conspiracy". Today, all that came to a head, as Megaupload founder Kim Dotcom was one of four people arrested for copyright infringement and conspiracy, with three others still at large.

The news has sent the internet into turmoil. Self-appointed internet justice league Anonymous has lobbed DDoS attacks at the US government agencies and copyright lobby groups, bringing their websites to a halt.

But how did this all go down in New Zealand? Why is one of the biggest cases of alleged copyright infringement from the US happening on the other side of the planet?

The answer - or at least part of it - lies behind the rounded cheeks of Megaupload's founder, Kim Dotcom.

Born in Germany as Kim Schmitz in 1974, Dotcom gained infamy in 1998 when he was busted for selling stolen credit card numbers. a Two year probationary sentence wasn't enough to keep his nose clean, however, with him being busted on numerous occasions for crimes like insider trading and embezzlement. He moved around the world, being arrested and deported from Thailand, before eventually setting up the "Mega" franchise of websites in Hong Kong in 2005 under the name "Kim Tim Jim Vestor".

The Mega franchise took off. It's estimated that the company made $150 million from premium subscriptions to its didgital locker service, while copyright holders claim it has cost them $500 million in piracy.

In 2010, Dotcom was granted residency in New Zealand, where he leases what is considered to be the country's most expensive house. Valued at $30 million, Dotcom actually applied to purchase the mansion, but was turned down by Associate Finance Minister Simon Power, who claimed he failed a character test. WHile unhappy about it, it wasn't enough to turn Dotcom away from our Kiwi neighbours.

According to an article last year in the New Zealand Herald, Dotcom decided to move to the land of hobbits and orcs to raise his three children in a safe and healthy environment.

"We have three young children ... and we want them to grow up in a safe and healthy environment far away from the troubles of the world."

Dotcom said as a "former hacker", he had an analytical mind and had formed a view on the direction of the world.

"I am not optimistic about the long term and believe we will see an increase of international conflicts and pollution with a growing population and drastic reduction in resources.

"New Zealanders might not yet understand how fortunate they are, but when the time comes New Zealand will be one of the most desired countries to live in and its wealth could reach unexpected highs."

While in New Zealand, Dotcom contributed largely to the economy, donating significantly to the Christchurch earthquake appeal and putting on a half a million dollar fireworks display for New Years Eve a few years ago.

But despite his apparent passion for the country and his investments in its economy, it wasn't enough to stop law enforcement from raiding 10 properties in Auckland this morning by 76 police and armed officers. Three people were arrested in the mansion, including Dotcom himself.

According to the NZ Police, the group is also implicated in money laundering, which potentially played a large roll in the scale of the operation:

Four people have been arrested in the Auckland area today as part of an operation led by the US Department of Justice targeting large scale criminal copyright infringement and money laundering around the world.

The arrests, carried out by the Organised & Financial Crime Agency New Zealand (OFCANZ) and New Zealand Police, follow a mutual legal assistance request from the United States to arrest of individuals for the purpose of extradition.

The Federal Bureau of Investigation is investigating a group of people who are alleged to be engaged in and facilitating criminal copyright infringement and money laundering on a massive scale.

The group, known as the “Mega Conspiracy” allegedly operates Megaupload.com, an Internet website that offers file hosting and distribution services. This site has been accused by the U.S. Department of Justice of reproducing and distributing infringing copies of all types of copyrighted works, including movies, television programmes, music, software and books.

Given that this all comes a day after major websites blacked out to protest new copyright laws giving even stronger powers to copyright holders with less due process, expect this situation to heat up dramatically. Copyright is a complicated issue, and while the massive entertainment companies are continuing to take the litigious road, more and more consumers around the world are going to become unsatisfied with the way American corporations are trying to control the world.

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