DOJ Hints At Additional Charges Against Kim Dotcom If He Launches Megabox

from the you-wouldn't-want-to-do-that,-now... dept

There have been a bunch of stories over the past month or so about how Kim Dotcom is supposedly getting ready to launch a new service called Megabox. We've purposely avoided such stories, mainly because they're pure hype and speculation for vaporware. If he actually launches something then perhaps there's a story there. Also, we're somewhat amazed (or possibly just amused) at Megaupload supporters who seem to already think that Megabox is an amazing idea, since the details reported about it certainly appear to be little different from garden variety malware, injecting ads into other sites. Either way, in a recent profile of Dotcom in Wired, he talks a little more about the new plans, suggesting that it was something to keep them busy while fighting the lawsuit.

That said, it appears that the Justice Department has seen the PR reports about the new vaporware and are effectively pre-warning Dotcom not to go forward with the plan.

A new filing from the DOJ in the US side of the lawsuit (embedded below), is really a response to Megaupload's recent request to have the charges against the company temporarily dismissed until such time as the individual defendants are extradited. As we've explained, this is mostly a procedural fight, over whether or not the company itself can be charged, despite not having a US presence. None of that directly impacts the individuals who have been charged, but certainly could impact the company's ability to launch a new business.

The DOJ filing mostly argues that there is no legal or practical reason to allow the case to be dismissed, even temporarily, as the individuals are still charged, and re-charging the company at a later date will just waste resources. It also argues that Dotcom's US-based lawyers are the real problem here, as they had offered to accept service of the lawsuit in exchange for some sort of deal early on (which the DOJ refused).

What's interesting about the filing is that, without directly addressing the new effort to launch Megabox or whatever Dotcom is calling the new thing, they appear to be warning him that doing so may lead to additional charges against him. The argument as it relates to the procedural question is that, in his push to be allowed to post bail in New Zealand, Dotcom clearly indicated that he would not and could not restart Megaupload or a similar business, because the government had so completely shut him down. As that relates to the procedural question, the DOJ is arguing that there can be no "harm" to the company Megaupload because Dotcom has already said he won't relaunch the company. So if he won't relaunch, what does it matter if the company is charged now or later?

But then the DOJ goes a little further. After it uses all those quotes of him promising not to relaunch anything while out on bail, the DOJ tosses the following into a footnote:

Defense Counsel’s claim that the corporate defendant can and should be allowed to operate undermines the sworn statements of Dotcom that he has no plans or ability to continue to operate or fund the businesses in the Indictment during pendency of the extradition process. If defendant Dotcom intentionally misled the court in New Zealand about his intentions and capabilities in order to obtain his release from pre-extradition confinement, it seems Defense Counsel’s representation might endanger Dotcom’s bail situation or even subject him to additional charges.

In other words, beyond this procedural question, the DOJ is hinting that if Dotcom launches something new, they may say he violated the conditions for getting bail.

The DOJ also uses this as an opportunity to (once again) try to block Megaupload from using its law firm, claiming that because the lawyers are arguing for the case against Megaupload to be dismissed, and this might lead Dotcom to launch something new, that there's a conflict of interest:

The issue raised by the claim of Defense Counsel is particularly awkward since defendant Dotcom is also their client. As the government has pointed out repeatedly, there are a number of conflicts in Defense Counsel’s representations of the various defendants in this matter, of which this is only the most recent example, that have yet to be reviewed by the Court

None of that actually makes much sense. Whether or not they have a legitimate claim for getting the case against Megaupload dismissed, that is a separate issue from whether or not Dotcom launches something new. While I'm guessing the procedural fight is a dead end, the fact that the DOJ is even using that to toss additional threats at Dotcom should he launch his new project shows that they'll leave no stone unturned in trying to hit back at Dotcom.

Filed Under: doj, kim dotcom, mega, megabox, threats
Companies: megaupload

Megaupload Renews Request For Criminal Charges To Be Temporarily Dismissed; Reminds Judge Of Earlier Request

from the er,-we-did-ask-for-that dept

When we wrote about the US judge in the Megaupload case siding with the US government in saying that, even without being able to technically serve the company (since it has no presence in the US), the criminal case could continue, we assumed that Megaupload would appeal. But even before appealing, the company is asking the judge to reconsider, based on an earlier request and the judge's own comments. The issue is that the judge's ruling only focused on whether or not the charges against Megaupload (but not the individuals charged in connection with the company) should be permanently dropped over the lack of service (in legal terms, it would be about having the charges dismissed "with prejudice"). However, the judge did note that perhaps it would make sense for the charges to be dropped without prejudice -- meaning that they would be dropped temporarily -- until such time as Kim Dotcom was extradited to the US, and could then be served as an "alter ego" for the company itself. The judge did not rule on that, however, since (he claimed) Megaupload had not asked for such a temporary dismissal.

In response, however, Megaupload quickly filed a motion reminding the judge that they had, in fact, suggested dismissal without prejudice back in July, quoting the transcript during oral arguments, which also points out why due process suggests this is the only proper result for a company that has effectively been killed and has no recourse since it hasn't truly been charged yet:

THE COURT: Well, that—can I require them to serve the company on any particular date? There's no date in the rule—there appears to be no statutory limitation, and I understand your due process argument. So I—what if I, you know, would start with a premise that I don't control when the Government decides to serve the company. Where do we go from there?

MR. BURCK: Well, Your Honor, we would submit that if the Court were ruling—going in that direction as a reasoning matter, that the appropriate result would be to dismiss the indictment without prejudice.

Because the company, again, has already suffered all the consequences of a criminal prosecution, so the—even if there's a trial and the company is acquitted and the individuals are acquitted, of course the company is still done.

So, we think that the due process claims trump all the other issues, and we think that if the Court were so inclined, that the Government should take certain steps in order to effectuate service, then—or if the extradition proceedings would be the relevant time line for that, again, the company should have an opportunity during that period of time to try to rehabilitate itself, because there isn't currently a criminal case that is sufficient for purposes of service and they've suffered massive harm.

So, of course, that would not be our preference, and we do think that the Supreme Court has said you can't change the rules of service, et cetera, but the—that’s all in our brief—but we do think that the alternative would be dismissal without prejudice, allow the Government at the appropriate time to then supercede the indictment again, add the corporation into the indictment.

And at that point, a year down the road, two years, however long it takes and wherever the MLAT process or the extradition process takes, at that point we could have this argument as to specific individuals, corporations, entities. But, in the meantime, having the company subject to the burden of a—the incredible burden of a criminal prosecution with no ability to defend itself and no service is an extraordinary result and one that is unprecedented.

In other words, Megaupload is saying dismiss this case until Dotcom is extradited, at which point (if he's ever extradited) then the company can be charged. But in the meantime, it's only fair to not have the company held back -- and the company did make that suggestion many months ago, contrary to the judge's suggestion otherwise.

Filed Under: due process, kim dotcom
Companies: megaupload

Court Says Case Against Megaupload Can Continue, Despite Not Being Able To Serve The Company

from the moving-on dept

We've covered one of the sideshow issues in the larger Megaupload case: whether or not the US DOJ could get away with charging Megaupload (the company) without it being located in the US. This wouldn't have impacted the individuals who were indicted separately, but the case against the company entity itself ran into a problem. Since Megaupload has no corporate presence in the US, and the letter of the law is pretty clear that you have to serve companies accused of criminal law violations in the US, there were concerns if Megaupload could even be charged. The DOJ argued that none of this mattered, because in spirit, it should be able to treat foreign companies as if they're in the US. Megaupload hit back, noting that the DOJ shouldn't get to just make up what it thinks the law should be when the law says otherwise.

Unfortunately -- but perhaps not too surprisingly -- the court has sided with the DOJ, saying that the case against Megaupload, the company, can move forward, even though the company was not served in the US.

Judge O'Grady echoes the government's belief that the rules weren't intended to be interpreted for the evasion of foreign defendants. He writes, "It is doubtful that Congress would stamp with approval a procedural rule permitting a corporate defendant to intentionally violate the laws of this country, yet evade the jurisdiction of United States' courts by purposefully failing to establish an address here."

The judge goes onto to make his own interpretation of Rule 4, saying that mailing a summons to the address of corporation's alter ego is the same as mailing the summons to the corporation itself. Often, that means mailing it to the domestic subsidiary of the foreign company; here, it could mean Kim Dotcom if he's ordered to be extradited at a later point.

"So long as the government could prove that an individual defendant is an alter ego of the corporate defendant, the government could satisfy Rule 4's mailing requirement by mailing a copy of the summons to one of the individual defendants once that defendant is extradited to this district," writes the judge.

I can see the judge's reasoning here, but it seems like a pretty slippery slope argument, basically allowing some pretty broad powers to the US to go after countries all around the world. Imagine how the US government would act if other governments around the globe claimed the same thing? It seems that if Congress really intended the DOJ to be able to go after foreign companies, then it should have made that clear in the law.

It sounds as though Megaupload is planning to appeal this ruling, to get a higher court to look into this issue.

In the end, though, this still remains a tangential issue, and one that doesn't impact the case against the individuals. But, for now, the government's argument has won the first round.

Filed Under: doj, jurisdiction, kim dotcom
Companies: megaupload

Megaupload Farce Stirring Up Backlash Against Copyright Overreach

from the too-much-to-hope? dept

Just when you think the Megaupload farce can't get any more ridiculous, it does. Following revelations that New Zealand's Government Communications Security Bureau illegally intercepted communications in the Megaupload case and provided those details to law enforcement authorities, the country's Prime Minister has been forced to apologize personally to Kim Dotcom: "Of course I apologize to Mr Dotcom, and I apologize to New Zealanders." From his position of increasing strength as more and more missteps by the New Zealand authorities come to light, Dotcom graciously accepted those apologies.

But the political fall-out is continuing. An article in the New Zealand Herald does a good job rounding up the country's deepening frustration over the way the New Zealand government carried out this botched operation, and at the behest of others:

If provincial newspaper editorials are anything to go by, there is growing anger about the authorities' handling of Kim Dotcom. The Waikato Times' editorial entitled, NZ: 51st state of the US, is particularly worth reading. It says that the announcement of the illegal spying has 'heightened suspicions that this country's relationship with the United States has become one of servility rather than friendship'. The editorial's conclusion is worth quoting at length: 'Dotcom is wanted in the US to face nothing more threatening than breaches of copyright laws.

That last point is new, and important: it means that people outside the world of digital activism are beginning to realize that the underlying reason this series of extraordinary blunders and abuses has come about is because enforcing copyright -- and making an example of those alleged to have infringed on copyright -- has been placed above concerns about an individual's rights, or even the law.

Some are rightly beginning to question whether the price being paid by society in terms of loss of fundamental rights is simply too high for the very limited gains by the media companies as a result of these actions. In a new post on his blog, James Firth explores this theme, and makes a bold claim:

This surely is a watershed moment when even the most ardent securocrats wake up and realise such abuses help no-one. Without public trust in the security apparatus we can never feel free, even if we are.

It would certainly be good news if that were the case, but it remains to be seen how many do in fact wake up -- and whether the grip of the copyright industries on both the legislative and executive branches around the world is loosened as a result.

Another question is whether in the wake of the public outrage over the New Zealand government's supine behavior in the Megaupload case, the latter might start asserting its sovereignty a little more by standing up to the US in the current TPP negotiations, and refusing to submit over things like software patents. It now looks increasingly likely that they will be introduced into New Zealand, and the suspicion has to be that this is partly as a result of continuing US pressure. Saying "no" to software patents would allow the New Zealand government to point to an area where it has defended the country's interests despite demands from elsewhere.

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Filed Under: backlash, copyright, kim dotcom, new zealand
Companies: megaupload

NZ Prime Minister Admits That The Government Illegally Wiretapped Megaupload Employees

from the yet-another-mishap dept

Since the January raid of Megaupload, not a month seems to go by in which another massive error in procedures isn't revealed concerning how US and New Zealand law enforcement handled the whole process. And each time, the mistakes seem to get bigger and bigger. They had the wrong warrants. They mishandled evidence. They mishandled the extradition request. And today comes the big news. New Zealand's Prime Minister, John Key, revealed that the Government Communications Security Bureau (GCSB), the equivalent of the NSA in New Zealand, illegally intercepted communications regarding individuals in the Megaupload case and provided those details to law enforcement. Like the NSA, the GCSB is in charge of monitoring electric communications, but is not allowed to use those tools domestically, only on foreign communications. Key has now ordered an investigation.

Mr Key says the Crown has filed a memorandum in the High Court in the Megaupload case advising the Court and affected parties that the GCSB had acted unlawfully while assisting the Police to locate certain individuals subject to arrest warrants issued in the case. The Bureau had acquired communications in some instances without statutory authority.

After being informed about the matter by the Director of the GCSB on September 17, the Prime Minister referred the Bureau’s actions to the Inspector-General, Hon Paul Neazor. The Inspector-General is an independent statutory officer with the power to enquire into any matter related to a government intelligence agency’s compliance with the law.

Once again, like pretty much all of these "mishaps," this seems to suggest a rather cavalier attitude towards actually following proper procedures under the law to go after Dotcom and Megaupload. Throughout this whole process, it really does appear that law enforcement, under pressure from Hollywood, believed that Dotcom was such a criminal mastermind that they could skirt the law in all sorts of ways to try to shut him down. And each time these mishaps come to light, it just raises more and more questions about whether or not law enforcement really had any legitimate evidence or reasons to do what they did.

Filed Under: gcsb, john key, kim dotcom, new zealand, spying, surveillance, wiretapping
Companies: megaupload

New Zealand Court Releases $4.83 Million To Kim Dotcom

from the another-loss-for-the-doj dept

The US government keeps having setback after setback after setback in its legal fight against Kim Dotcom and Megaupload. If the US had its way, all of Dotcom's assets would have been frozen, he would be stuck in jail with no opportunity to be bailed out, and New Zealand would have already rubber stamped extradition papers. But none of that has happened.

The latest is that, against the wishes of the US and the New Zealand governments, the court has granted Dotcom the use of $4.83 million out of the assets that were frozen in order to pay some of his legal expenses (though, not for his US lawyer, Ira Rothken). The order also says that the released funds cannot be used for Dotcom's co-defendants. The ruling, embedded below, is pretty thorough and suggests (yet again) that the US-driven prosecution of Dotcom is mostly focused on trying to railroad him, rather than allow him to mount an adequate defense. He may very well be guilty, but it's pretty shameful that the steps taken by the US and New Zealand governments seem designed to not even give him a chance to properly defend himself. At least the New Zealand court has recognized that's not right, and will allow him access to some funds, with specific limits, so that he can put together his defense.

Mr Dotcom's rights under the NZBORA and the International Covenant on Civil and Political Rights further tip the balance in his favour. The State's contingent interest in the restrained property is of punitive nature and limited to depriving Mr Dotcom of the fruits of his alleged offending. In contrast, Mr Dotcom's access to counsel is supported by his rights to natural justice, to be presumed innocent until proven guilty, and to consult and instruct a lawyer and to have adequate time and facilities to prepare a defence. It is generally assumed that the right to access defence counsel includes the right to counsel of the defendant's choice....

Filed Under: kim dotcom, legal fees, new zealand
Companies: megaupload

New Zealand High Court: FBI Must Release Its Evidence Against Kim Dotcom

from the not-going-well dept

The US's case against Kim Dotcom and Megaupload continues to run into significant problems. While the US Justice Department (with an assist from New Zealand law enforcement) has continued to insist that extraditing Kim Dotcom halfway around the world to the US was a mere formality, and that the evidence against him need not be shown, the courts in New Zealand have taken a rather different view. They refused to rubberstamp the acquisition as the US hoped. Then, the New Zealand High Court stepped in to review the extradition issue, making a final ruling that says that the FBI needs to reveal its evidence and that the extradition request does not comply with the law as currently written.

In other words, a complete and utter failure by the FBI in this effort.

The full ruling (pdf and embedded below) is quite an interesting read, if you've got the time. Basically, the court agrees with the assertion from the US that an extradition hearing isn't meant to try the full case... but, then points out that this doesn't mean you completely ignore the basic rights of the accused. It is still a criminal case, and as such they have certain basic rights that must be observed -- and which the US was trying to deny to Dotcom. The court considers a variety of case law, including some Canadian extradition cases, and even directly notes that some past cases involved "rubber stamp" approvals of extradition (literally using that term). However, more recent cases have pushed back against that and said that the home court need not try all of the evidence, but should at least look at the evidence to see if it is defective.

The court further notes the fundamental unfairness of the argument made by the US and New Zealand: "severely restrict[ing] the ability of [one party] to file relevant evidence would not easily be characterised as 'fair.'"

The bigger question, then, was whether or not the FBI needed to release its evidence to Dotcom, and again, the Court ruled against the US's position. The Court notes that the law enforcement folks rely on obsolete and outdated caselaw to make their argument, and notes that "I do not find this line of authority particularly persuasive" because they really cover different issues, and (of course) the arguments made appear to be stretched from the original intentions. The judge seems to recognize that the FBI and the Crown are making ridiculous arguments, noting that there is "nothing incompatible" with revealing the evidence in New Zealand and then using it in the US case should extradition be granted.

In my view disclosure should be provided by the requesting state. The Act provides the person sought with a right to challenge whether the threshold for extradition has been met before he will be extradited. Consistent with the requirements of... the Bill of Rights Act to a fair hearing, the person sought should be given access to sufficient information to enable him or her to fully participate in that hearing on an equally informed basis. Without access to materials relevant to the extradition hearing phase, the person sought will be significantly constrained in his or her ability to participate in the hearing and the requesting state will have a significant advantage in terms of access to information.

The order lists out what needs to be disclosed, and it's a pretty long list. Basically "all documents" relating to each of the key charges.

Separately, the judge noted that the "Record of Case" document, which the Crown (with the FBI) used to argue for extradition wasn't up to proper legal standards in that it did not provide the necessary info to support extradition.

She also found the "Record of Case", the document which made the argument for extradition, did not currently meet the legal requirements. She said the FBI was under an "obligation of candour" to provide any evidence which could impact on the court's judgment of whether the extradition threshold had been met - and no information had been provided to support FBI claims. The document "did not comply", she said.

Basically, this is the final ruling on this issue. The New Zealand government and the FBI can't appeal it any higher and now have to actually let Dotcom and his lawyers see the evidence against him. What a concept.

Filed Under: discovery, evidence, extradition, fbi, kim dotcom, new zealand
Companies: megaupload

Is Being Rich And Arrogant Against The Law? The RIAA & MPAA Seem To Think So

from the guilt-by-arrogance? dept

I'm planning to do some more thorough coverage of many of the comments that were submitted to the IP Enforcement Coordinator for next year's "Joint Strategic Plan." I just need to find an open block of time to go through a bunch of them. However, the folks over at TorrentFreak have highlighted one of the more ridiculous claims made in the combined filing from the RIAA & MPAA -- suggesting that people like Kim Dotcom are guilty of breaking the law because they're rich, arrogant and are trying to influence public opinion:

In this case, the Justice Department and other federal agencies are now grappling with a set of wealthy and arrogant defendants who are leaving no stone unturned in their efforts to sway public opinion against efforts to hold them accountable...

This reminds me of the debate I had with Jonathan Taplin, in which he referred to Kim Dotcom's (rented) yacht, and asked where were the musicians' yachts. Thing is, if I wanted to, I could easily find evidence of various rock stars with yachts. I could easily point to evidence of record label and movie studio execs with yachts, or who are phenomenally wealthy. Hell, I could just point you to the fact that the RIAA's boss, Cary Sherman made $3.2 million in salary in 2009 -- a number that I imagine is more than what nearly every single person reading this site makes in a year (or, in their lifetimes). Being wealthy is certainly no sign of guilt. And he got this amount even as he's leading the RIAA through it's clear decline in relevance phase, where he's still fighting the wrong war.

Similarly, it's not hard to find examples of massive arrogance on the part of these execs -- from the RIAA and MPAA putting down the public (repeatedly) or ignoring valid concerns about SOPA and PIPA, to decades of arrogant efforts to destroy all kinds of innovations they don't like, from radio to cable TV to the VCR to the mp3 player to the DVR.

Finally, these are the guys who run the media, and they're complaining about a few execs trying to influence public opinion? The MPAA's largest members are Universal (who owns NBC), Disney (who owns ABC), Viacom (who owns a bunch of TV stations and spun off CBS). And they're going to complain that some tech folks have an undue influence on public opinion? Really? And, let's not forget that these same groups have also "left no stone unturned" for decades in trying to influence public opinion. "Home taping is killing music." Remember that? You know those "FBI warnings" on every single movie you watch?

I'd say that if we're going to stack up which side of the debate has involved more "wealthy and arrogant" individuals "who are leaving no stone unturned in their efforts to sway public opinion"... it has to start with the RIAA and the MPAA. But, of course, they're allowed to do all of that, because none of it is illegal. But to try to associate such activity with illegality seems to be a stretch way beyond anything reasonable. Is Kim Dotcom loud, arrogant, crass and tacky in his displays of wealth? Absolutely. I doubt he's the kind of person I'd care to spend any amount of time with, personally. But just because his style is so outlandish, it doesn't automatically make him a criminal, as the RIAA and MPAA imply. Similarly, I don't automatically assume that super wealthy, arrogant individuals who work for the entertainment industry are obviously criminals either.

It is really quite obnoxious and demeaning for these large trade agencies to go around smearing people based on superficial items like arrogance and wealth. Kim Dotcom may eventually be found guilty of criminal activity. And, at that point, they're free to publicize that his actions here were criminal. But in the meantime, they're acting like cliquish high school girls, tarring and feathering people because they don't like the way they look or act.

Filed Under: arrogant, cary sherman, copyright, entertainment industry, kim dotcom, rich
Companies: mpaa, riaa

Video Of Dotcom Raid Revealed, As NZ Police Admit It Was 'Over The Top'

from the ya-think? dept

Yesterday we noted that government officials were seeking to suppress video and images from the raid on Kim Dotcom's home. As a bunch of folks have been sending in all day, New Zealand's 3NEWS has revealed some of the footage in a video interspersed with video from the courtroom hearings and a tour they did a few months ago of the room in which Dotcom hid. It's interesting to note that, contrary to some reports of law enforcement having to "break in" to a "safe room," the reality turned out to just be a hidden room which Dotcom left unlocked. But, much more telling is the ridiculous level of force that the government used to arrest someone for copyright infringement -- which even New Zealand law enforcement admitted was "over the top." Other reports have noted that Dotcom's security staff includes a police officer who could have been approached. Police also admitted that the effort was rushed and done with much less planning than they would have liked (which supports the notion floated by some that the timing was designed to happen right after the massive SOPA protests). Oh yeah, you'll notice in the video that two helicopters (and many police vehicles) were used -- but in court it was revealed that NZ law enforcement had said that "a full tactical response was not appropriate."

Perhaps they just wanted to look good on camera for the MPAA folks who were so infatuated with going after Kim Dotcom. Certainly, Americans were on the scene. NZ law enforcement admitted that the FBI came along for the ride...

Filed Under: copyright, kim dotcom, law enforcement, new zealand, over the top, raid
Companies: megaupload

Why Are New Zealand Prosecutors Seeking To Suppress All Images & Video Of Megaupload Raid?

from the seems-sketchy dept

As lots of publications are reporting, over in New Zealand, Kim Dotcom took the stand to testify about how the police treated him during the raid on his home as part of the international effort to seize and shut down everything related to Dotcom and Megaupload. I have no idea if the claims he makes of being kicked and punched and the like are accurate. I'm sure his detractors will question how trustworthy the testimony is. Frankly, I have no idea how accurate it is.

But here's the thing that I find most interesting. Buried all the way at the end of the Stuff article linked above is the following line:

The Crown is seeking for all images and CCTV footage from the raids to be suppressed.

To me, that seems like a point that should be made up top. If Dotcom is being inaccurate in his descriptions, then wouldn't showing the video and images that prove him wrong basically destroy all of his credibility and help the government with their case? The fact that they're trying to suppress that very evidence certainly lends credence to his claims, and (at the same time) calls into serious question the conduct of law enforcement during the raid.

Filed Under: details, evidence, kim dotcom, new zealand, prosecution, raid, suppression, video