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Megaupload's Kim Dotcom takes the stand, fends off inquiries into finances

At extradition hearing, Dotcom says he made $13 million USD from sales of Mega shares

Kim Dotcom at extradition hearing
Kim Dotcom at extradition hearing
Greg Sandoval

Kim Dotcom, founder of the now defunct file-storage service Megaupload, made his long awaited appearance in a New Zealand court on Thursday.

Indicted by the United States on criminal copyright violations in January 2012, Dotcom testified at a hearing to determine whether he and three other former Megaupload executives will be extradited to the US to stand trial. For nearly four years, lots of legal jockeying has prevented the hearing from getting to court, and even now Dotcom's attorneys seek yet another postponement.

The defense claims the US is trying to starve the defendants of resources. When the DOJ arrested Dotcom and six other Megaupload executives, it accused them of overseeing one of the all-time largest internet piracy operations. The men's assets were seized and since then the feds have refused to release a cent for the defendants' legal defense. In the meantime, the money Dotcom earned from other business ventures started subsequent to the Megaupload shutdown, was frozen last year following a civil complaint filed against him by the top Hollywood film studios.

dotcom stand

Ira Rothken, Megaupload's lead lawyer told the court that without access to some of these funds, Dotcom and the accused executives can't adequately defend themselves.

New Zealand prosecutors, arguing on behalf of the United States, aren't buying these claims. During their cross examination of Dotcom they asked him how much money he spent in 2014 helping to launch the Internet Party, a New Zealand political group focused on protecting privacy and Internet freedom. On the stand Dotcom said he contributed between $4.6 to $4.8 million.

Prosecutors asked Dotcom how much he earned from the sale of shares in cloud storage service Mega, a company founded a year after his arrest. Dotcom told the judge the sale generated between $15 million and $20 million in New Zealand dollars, or about $13 million USD. Prosecutor Mike Ruffin then asked Dotcom why, with all this money, didn't he put aside some for future legal bills? Why hadn't he created a "fighting fund."

Dotcom said that his first priority was to ensure his children's education and the economic welfare of his wife, who is now estranged. Then he explained that he couldn't have anticipated the Hollywood studios would grab money generated by business interests that had nothing to do with Megaupload.

"If I had a crystal ball or in hindsight, I probably should have done that"

"If I had a crystal ball or in hindsight, I probably should have done that," Dotcom responded.

Dotcom seemed to become irritated with Ruffin's line of questioning when the prosecutor asked why the Megaupload founder hadn't used some of his living expenses to pay legal bills.

Dotcom said: "If i wanted to be homeless and fire all my staff and take my kids out of school, I could have done that, yes."

According to Dotcom, the lack of resources has already led to serious repercussions. In February, Andrus Nõmm, an indicted former Megaupload programmer, plead guilty to felony copyright infringement and was sentenced to a year in prison. Finn Batato, one of the former Megaupload execs fighting extradition, said Nõmm is now cooperating with the DOJ.

Dotcom said via Twitter that the programmer simply ran out of money fighting extradition and was left with few choices.

Unless the judge overseeing the case, Nevin Dawson, agrees to the defense's request to postpone the hearing or to throw the entire case out, it is expected to last at least another week.