Fugitive Fraudster Who Demanded Half Of Facebook Arrested After Three Years On The Run

from the tough-to-hide-in-the-age-of-facebook dept

It's been a while since we last wrote about Paul Ceglia. If you don't recall, way back in 2010, Ceglia suddenly claimed that years earlier, he had hired Mark Zuckerberg to do some software development, and bizarrely (and literally unbelievably), that part of the contract for Zuck to work on Ceglia's project... was an agreement to hand over 50% of Facebook, which didn't even exist yet. Making it more ridiculous, Ceglia then claimed some weird interest amounts, and therefore was demanding ownership of 84% of Facebook. The whole thing was nonsensical, and while Zuckerberg admitted he had done some work for Ceglia prior to starting Facebook, nothing about the supposed contract made any sense at all. Beyond the bizarre nature of the contract Ceglia claimed he had with Zuckerberg, it quickly became clear that other evidence Ceglia presented, including purported emails, didn't look real.

A year later, during the discovery process in the lawsuit, the actual original contract was found and it didn't mention Facebook at all, just as most people assumed. Instead, it became clear that Ceglia doctored their contract. Ceglia tried, weakly, to claim that even though the original was found on his computer during discovery, that it was actually Photoshopped and planted by Facebook. As you might imagine, literally no one believed that. It also probably didn't help that he kept some of the details of his plan in an email account called GetZuck.

Finally, in 2012, Ceglia was arrested for fraud. He was set to go to trial in 2015 when he disappeared -- apparently cut off his ankle bracelet and disappeared with his family. Late last week, however, it was reported that he had been found and arrested in Ecuador and was likely to be sent back to the US shortly.

I guess it's hard to just disappear in the age of Facebook. Even if you pretend to own a giant chunk of it.

Filed Under: fugitive, mark zuckerberg, ownership, paul ceglia
Companies: facebook

Even If You Think Kim Dotcom Is Guilty As Sin, The US Government Stealing His Assets Should Concern You

from the it's-called-due-process dept

Earlier this year, we covered a very troubling situation involving Kim Dotcom and the US government. As you almost certainly already know, Dotcom is fighting extradition from New Zealand to the US to face a bunch of charges concerning criminal copyright infringement. We've written about those charges as well as the extradition fight many times. However, while all of this was going on, the Justice Department filed a separate lawsuit, not against Dotcom himself, but against all of his stuff. We've talked for years about the problems of the "asset forfeiture" program in the US, and Dotcom's case drives all of those points home. And, even if you think that Kim Dotcom is absolutely guilty, a horrible person, responsible for billions of dollars in losses to the film and music industries, you should still be concerned about the asset forfeiture aspects here.

Again, this lawsuit is technically entirely separate from the ongoing case against Dotcom himself. Instead, it's USA v. All Assets Listed In Attachment A, And All Interest, Benefits, And Assets Traceable Thereto -- which is a catchy name if you're trying to hide what you're really doing, which is stealing all the assets of someone in a foreign country. The Attachment A in the title of that lawsuit is basically a listing of all of Kim Dotcom's assets. In asset forfeiture cases, since the government is technically filing the lawsuit against the stuff, arguing that the stuff itself is guilty, it leaves only limited ability of the original owner of that stuff to try to block the government from taking it all. And, that was made much more difficult by Dotcom (who has never even been to the US) fighting extradition in the (entirely separate) lawsuit against him. The DOJ, somewhat perversely, used the extradition fight to argue that Dotcom is a "fugitive," to basically say that he can't try to block the forfeiture, and the judge agreed.

The end result? The court gave the DOJ a huge green light to legally steal millions of dollars worth of assets from Kim Dotcom despite the lack of any court ruling or admission of guilt. That seems like a rather big due process concern. While a New Zealand court has put a temporary stop to the US government taking the New Zealand portion of the assets, back in the US, there is an appeal going on over the initial ruling.

As part of that, three organizations that you wouldn't normally think of as associating themselves with the likes of Dotcom, have stepped up to argue that the whole civil asset forfeiture effort against Dotcom's stuff is a complete farce. The Cato Institute, the Institute for Justice and the National Association of Criminal Defense Lawyers have filed an amicus brief in the appeal arguing forcefully about how ridiculous this whole case is (not the case against Dotcom, but the case against all his stuff). As the Cato Institute notes in its blog post about this:

The Fifth Amendment’s Due Process Clause requires an opportunity to be heard and an opportunity to defend against government-initiated actions against your property. Unlike an escaped criminal appellant who is scorning the court’s jurisdiction, in civil forfeiture, it’s the government that has dragged Dotcom and the others into court. Moreover, given the amount of abuse in civil-asset forfeiture, the government shouldn’t be allowed both to profit from the forfeiture and suppress defenses by calling residents of other countries “fugitives.” Finally, the reasons for fugitive disentitlement in criminal appeals simply can’t be transferred to civil-asset forfeiture. When an individual is “on the run” from criminal prosecution, courts can’t enforce judgements against them, but a valid forfeiture order would be fully enforceable against Dotcom if the court has jurisdiction over the property. Fugitive disentitlement is also used to deter felons from escaping justice, but there’s no similar concern here, where the property can’t run away and the claimants are merely residing in their home countries. The Fourth Circuit should not only allow the Megaupload defendants to challenge the seizure, it should also consider striking down as unconstitutional all uses of fugitive disentitlement in civil-forfeiture cases.

Frankly, if Dotcom is eventually found guilty of that which he is charged with (which is a separate issue altogether), then it could be perfectly reasonable to argue for asset forfeiture of the proceeds from such illegal acts. But to argue for civil asset forfeiture entirely separately from that process and to abuse the process by arguing he's a "fugitive" in order to get those assets is particularly ridiculous:

Under civil forfeiture laws, the government can take property without an underlying criminal conviction based only on the allegation of a crime. Those whose property has been seized can get it back by proving that their property is “innocent.” The government, however, is preventing the defendants from even making that argument. Using the “fugitive disentitlement” doctrine, the government is blocking the defendants from challenging the forfeiture.

Fugitive disentitlement has historically been applied only to criminals who escaped custody while appealing a conviction, the idea being that a court could decide to dismiss the appeal because any judgment would be unenforceable against an absent defendant. Here, the government has decided that, because the Megaupload defendants aren’t coming to the United States to defend their property, they are “fugitives” who have lost the ability to defend against that seizure — and the district court agreed.

As the filing itself notes:

Stripping the claimants of their due process rights isn’t just unconstitutional, it’s dangerous. There’s a growing literature on the abuse of civil forfeiture—and those abuses are directly tied to the protections given to the claimants here, as well as the ability of government officials to directly benefit from forfeitures. This court should not ratify a doctrine that would make abuses even easier.

Moreover, the reasons for invoking the fugitive disentitlement doctrine in criminal appeals are inapplicable to civil forfeiture actions. First, unlike an order against an absent criminal defendant, a valid forfeiture order where the court has rightful jurisdiction will be fully enforceable. Second, the claimants here haven’t scorned the district court’s authority as a fleeing criminal defendant would. Third, by appearing before the court via counsel, the claimants haven’t disrupted the court’s processes or offended its dignity. Finally, unlike with criminal appellants—who may need to be deterred from flight by the threat of disentitlement—the claimants are merely continuing to lawfully reside in their home countries.

Once again, even if you think Dotcom is the root of all evil in the world, even then you should be concerned about this particular aspect of the case(s) against him. It seems telling to me that, in the comment sections on our previous posts, those who have argued that Dotcom is clearly guilty, seem to have no problem with the asset forfeiture. They don't see it as any sort of due process violation because they've already decided he's guilty in their minds, just as the US government has. But that's not how due process works. You're supposed to be found guilty first. If these people are so sure that Dotcom is guilty, why not wait until that's shown in a court of law, rather than having to go through this separate process to take all of his stuff?

Filed Under: asset forfeiture, doj, due process, fugitive, fugitive disentitlement, kim dotcom
Companies: cato, institute for justice

New Zealand Steps In To Block US Gov't From Stealing All Of Kim Dotcom's Stuff

from the that's-not-how-the-law-works-there dept

Back in March, we explained the ridiculous process by which the US government was able to steal millions of dollars from Kim Dotcom. If you want the details, go read that post, but the shorter version is that entirely separate from the various lawsuits involving Dotcom, the US government filed a separate lawsuit against all of Kim Dotcom's stuff (literally). Using the highly questionable process of civil asset forfeiture, the government is able to declare the stuff guilty of a crime, and thus making it ripe for the government to just take and keep. There are, of course, all sorts of questionable things about civil asset forfeiture, but it got even more bizarre in this case. That's because, after Dotcom's lawyers sought to intervene (which is how you block this kind of theft), the government had Dotcom declared a "fugitive" even though they know exactly where he is and he hasn't "run" from anything. Then, as a "fugitive," it was deemed that he did not actually intervene, and thus, the government was granted a "default judgment" (what you usually get when someone doesn't respond at all to a case).

Any judicial system that actually believed in due process would at least wait until the rest of the legal issues played out, including Dotcom's extradition and, if he is extradited, his trial over the criminal charges against him. If he loses all of that, then it seems reasonable to seek to forfeit his assets. But without a trial and conviction, it seems ridiculous to even go through the forfeiture process. And to basically force him to lose by declaring him a "fugitive" is just spitting in the face of due process.

At the end of that last post, however, we noted that the situation wasn't final. Since most of the assets were in New Zealand and Hong Kong, it was possible that he could get those countries to block the US from just taking those assets. And, that's exactly what's happened. A New Zealand court has ruled in Dotcom's favor [pdf], blocking the US from taking his stuff. The key issue: New Zealand takes a very different approach to these issues and (quite reasonably) finds the US process absurd. It starts out by pointing out that the whole "fugitive" designation is ridiculous, and that under New Zealand law, someone in the same situation would not be declared a fugitive:

While I accept that s 57 would permit the court to make a forfeiture order in the absence of a respondent, it does not expressly authorise the court to proceed on an ex parte basis or to decline to receive submissions made on behalf of an absent respondent who wished to be heard

The court also notes that just because Dotcom is fighting extradition in a New Zealand court it does not mean that he is "not amenable to justice" as is required for such a forfeiture of assets.

Further, the court recognizes the due process issue inherent in taking away all of the money from a defendant seeking to defend himself in court:

The application of the fugitive disentitlement doctrine to a person who is exercising a bi-laterally recognised right to defend an eligibility hearing, with the result that he is deprived of the financial means to mount that defence, is to put that person on the horns of a most uncomfortable and (the plaintiffs would say) unconstitutional dilemma.

And thus, after a lengthy discussion delving into many of the details about this, the judge concludes that she will not, in fact, allow the US government to take Dotcom's stuff, because doing so would be a huge burden on someone trying to defend themselves:

It is, I think, self evident from the above discussion that the plaintiffs have a substantial position to preserve and there will be very real consequences if it is not protected, pending final determination of the claim for review. If the provisional view I have formed about the unavailability of post-registration relief is correct, authorising the registration application to proceed now might deprive the plaintiffs of any ability to defend the extradition or to pursue their appeals against the forfeiture order in the United States.

I have little hesitation in concluding that interim relief should therefore be granted. Accordingly there will be a declaration that the Commissioner of Police is to take no further action that is consequent upon the decision by the Deputy Solicitor-General (Criminal) to authorise him to apply to register the foreign forfeiture orders made by Judge O’Grady in the District Court in Virginia on 27 March 2015 until further order of this Court.

This is far from over, as the New Zealand government is likely to appeal as well, but this whole process continues to be a fascinating power play by the US government -- with it repeatedly assuming that everyone will just follow what it wants. And, so far, the New Zealand courts have been ready to push back on the more extreme requests like this one.

Filed Under: asset forfeiture, default judgment, doj, fugitive, kim dotcom, new zealand, us

US Court Rules That Kim Dotcom Is A 'Fugitive' And Thus DOJ Can Take His Money

from the um. dept

In the long, convoluted and complex legal battles facing Megaupload founder Kim Dotcom, there was some bizarre stuff that happened late last year. As you may recall, early on, the US government seized basically all of his stuff and money. Dotcom has made efforts to get some of it returned, as it's tough to fight the most powerful government in the world when it's holding onto all of your money. Keep in mind from our previous discussions on asset seizure and forfeiture, the government can basically seize whatever it wants, just by claiming it was somehow related to a crime, but the seizure is only a temporary process. If the government wants to keep it, it then needs to go through a separate process known as civil asset forfeiture, which is effectively the government suing the assets. Back in July, the US government moved to forfeit everything it had seized from Dotcom in a new lawsuit with the catchy name USA v. All Assets Listed In Attachment A, And All Interest, Benefits, And Assets Traceable Thereto. As you may have guessed, Attachment A [pdf] is basically all of Kim Dotcom's money and posessions.

Back in November, the DOJ argued that it should get to keep all of Kim Dotcom's money and stuff because he's a "fugitive", which is a bizarre and ridiculous way to portray Kim Dotcom, who has been going through a long and protracted legal process over his potential extradition from New Zealand (though he's offered to come to the US willingly if the government lets him mount a real defense by releasing his money). Dotcom's lawyers told the court that it's ridiculous to call him a fugitive, but it appears that Judge Liam O'Grady didn't buy it.

In a ruling [pdf] that was just posted a little while ago, O'Grady sided with the government, and gave the DOJ all of Dotcom's things. You can read the full reasoning here and it seems to take on some troubling logic. Dotcom's lawyers pointed out, as many of us have, that there is no secondary copyright infringement under criminal law, but the judge insists that there's enough to show "conspiracy to commit copyright infringement." But the reasoning here is bizarre. Part of it is the fact that Megaupload did remove links to infringing content from its top 100 downloads list. To me, that seems like evidence of the company being a good actor in the space, and not trying to serve up more infringing downloads. To Judge O'Grady and the DOJ, it's somehow evidence of a conspiracy. No joke.

The government has alleged that the conspirators knew that these files were infringing copyrights, as evidenced by their exclusion of infringing files from the "Top 100" list. The "Top 100" list purported to list the most frequently downloaded files on Megaupload.... According to the government, an accurate list would have consisted almost entirely of infringing content, so the claimants "carefully curated" the list to make the site look more legitimate.... Additionally, the claimants regularly told copyright holders, including many U.S.-based organizations, that they would remove infringing content, when in actuality they only removed particular links to the files.... The actual infringing files remained on the Mega-controlled servers and could be accessed from other links.

As for that latter part, there are tons of perfectly legitimate reasons to only remove the links and not the underlying files. If Megaupload was doing deduping, then some version of the same file could be perfectly legitimate. Let's take an example: say that you and I have an MP3 of a Katy Perry song. I upload it to Megaupload to keep as a backup. You upload it to distribute to the world. Megaupload dedupes it, and just has the file stored one time. Your link could be potentially infringing if you distribute unauthorized copies, whereas my copy may be a legitimate personal backup. Given that, Megaupload should only delete the links that are called out as infringing, rather than the underlying files, which -- depending on their use -- may or may not be infringing. But the court just takes the DOJ's version and says "good enough for me."

The court also has no problem with the fact that most of the assets aren't in the US, noting that since some of the "conspiracy" took place in the US, that's good enough. It more or less brushes off the concerns raised by Dotcom and the other defendants that this appears to violate existing treaties between New Zealand and the US -- basically saying that because Dotcom refuses to come to the US, it's not "punitive." Huh? On top of that, the judge says that taking all of Dotcom's assets shouldn't interfere with the legal process in New Zealand, because the New Zealand courts could (yeah right) reject the DOJ's request after this ruling to hand over Dotcom's assets.

Then we get to the whole "fugitive" bit. Judge O'Grady notes that the statute does allow him to call anyone who "declines to enter" the United States a fugitive, and argues that Dotcom fits that description. Furthermore, he actually argues that Dotcom's offer to the DOJ to come willingly to the US if the money is freed for his defense actually works against Dotcom, and gives weight to the fugitive claim:

As demonstrated, Dotcom need not have previously visited the United States in order to meet the prerequisites of § 2466. The statute is satisfied where the government shows that the claimant is on notice of the criminal charges against him and refuses to "enter or reenter" the country with the intent to avoid criminal prosecution. Because the court assesses intent under the totality of the circumstances, it is certainly relevant that Dotcom has never been to the United States and that he has lived in New Zealand since 2011, where he resides with his family. This tends to show that he has other reasons for remaining in New Zealand besides avoiding criminal prosecution. However, the existence of other motivations does not preclude a finding that he also has a specific intent to avoid criminal prosecution. Dotcom's statements, made publicly and conveyed by his attorneys to the government, indicate that he is only willing to face prosecution in this country on his own terms. See Technodyne, 753 F.3d at 386 (2d Cir. 2014) ("The district court was easily entitled to view those [requests for bail], evincing the [claimants'] desire to face prosecution only on their own terms, as a hallmark indicator that at least one reason the [claimants] declined to return in the absence of an opportunity for bail was to avoid prosecution"). Dotcom has indicated through his statements that he wishes to defend against the government's criminal charges and litigate his rights in the forfeiture action. If it is truly his intent to do so, then he may submit to the jurisdiction of the United States.

In short, damned if you do, damned if you don't. This is the justice system, ladies and gentlemen. The DOJ gets to seize and keep all your money, and merely asking for access to it to fight to show your innocence is used as a reason to allow the DOJ to keep it. So he comes to the US and has to fight criminal charges without his own money, or he stays in New Zealand and the government uses it as an excuse to keep all the money. How is any of this even remotely fair? Where is the "due process" in totally handicapping Dotcom from presenting a defense?

Again, it is entirely possible that Dotcom and the others broke the law -- though the case certainly does look pretty weak to me. But what's really astounding is how far the DOJ appears to want to go to make it absolutely impossible for Dotcom to present a full defense of his case.

Filed Under: asset forfeiture, conspiracy, copyright, copyright infringement, criminal copyright infringement, doj, fugitive, kim dotcom
Companies: megaupload

If You're A Fugitive, You Probably Shouldn't Update Your Facebook Status With Location... Or Friend A Fed

from the some-suggestions dept

No one ever said criminals were particularly intelligent. With all the stories we've seen of various people revealing things they shouldn't on social networking systems, you knew that stories like this one were going to become more common. Apparently a fugitive on the run for bank fraud not only updated his Facebook status with his whereabouts (a resort in Cancun, Mexico), but also "friended" a former Justice Department official, who helped hand over the fugitive's info to officials who tracked down and arrested the guy.

Filed Under: fugitive, social networks
Companies: facebook

If You're A Wanted Fugitive In The US And You Blog, Maybe Don't Mention Plans To Travel To A US Territory

from the just-a-suggestion dept

The LA Times has a story about a Japanese man who has been wanted on charges of murder for over 25 years, who was finally arrested thanks to him tipping off authorities on his blog that he would be traveling to the US territory of Saipan. Kazuyoshi Miura is believed by US authorities to have killed his wife, while the pair were visiting the US in 1981. He was tried and convicted in Japan -- but the case was overturned. US authorities have been trying to arrest him ever since. Apparently, a few years back he set up a blog, and US police have been monitoring it to see if he would do something so silly as to mention the fact that he'd be traveling to a US territory -- which he actually did. So, just as a public service announcement: if you're a wanted fugitive in the US, perhaps don't announce on your blog that you'll be traveling there.

Filed Under: blog, fugitive, japan, murder