The United States Justice Department filed charges against Megaupload today, calling the file-sharing service an "international organized criminal enterprise allegedly responsible for massive worldwide online piracy." Founder Kim Dotcom and three Megaupload executives were arrested today in Auckland, New Zealand at the request of the US government under provisional arrest warrants, and the DOJ describes three other execs as "at large."
The complaint alleges that Megaupload, founder Kim Dotcom, and his team are responsible for $175 million in "criminal proceeds" and "more than half a billion dollars in harm to copyright owners." Specifically, Kim Dotcom and six of his executives are charged with running "the Mega conspiracy websites" under a business model "expressly designed to promote uploading of the most popular copyrighted works." The DOJ also says Megaupload also developed its uploader rewards program as a means of laundering money.
The complaint charges Dotcom, his executives, the Megaupload Limited company and a second company called Vestor Limited which Dotcom used to shield his personal assets. Specifically, the charges are:
- engaging in a racketeering conspiracy
- conspiring to commit copyright infringement
- conspiring to commit money laundering
- two substantive counts of criminal copyright infringement
The DOJ has also issued more than 20 search warrants in the US and eight other countries, seized more than $50m in assets in the US, Netherlands, and Canada, and seized more than 18 domain names associated with Megaupload. The investigation was led by the FBI with broad international assistance from New Zealand, Hong Kong, the Netherlands, the UK, Germany, Canada, Australia, and the Philippines.
The charges and the arrests come just a few weeks after Megaupload itself filed suit against Universal Music Group for having a controversial promotional video featuring Kanye West, will.i.am, and other celebrities pulled from YouTube — it appears that battle was just a minor skirmish before a much broader international war. The enforcement effort also comes just one day after the internet community launched massive protests against the proposed Stop Online Piracy Act in the United States, a law which would grant the government the ability to block sites like Megaupload from the US internet. While SOPA has been tabled for the moment, the Megaupload case should prove to be a flashpoint for the issue in the months to come: both an example of how large the claimed piracy problem has become and how the US can already enforce its laws with broad international support. Get ready for a ride.
Update: Rick Shera, a New Zealand-based attorney, reports on Twitter that Kim Dotcom's mansion is blockaded by police at all entrances. No escaping this one, it seems.