NZ residents arrested in internet piracy bust
ARRESTED: Internet millionaire Kim Schmitz in 1999.
Four people, including two New Zealand residents, have been arrested in Auckland today following an FBI led-swoop on the world's largest file-sharing site Megaupload.com.
Police executed 10 search warrants across Auckland and the four people were set to appear in the North Shore District Court this afternoon on charges relating to alleged violations of piracy laws worth hundreds of millions of dollars.
United States prosecutors in Virginia have shut down the Megaupload website and charged its founder, six others and two corporations with running an international organised criminal enterprise.
The US Justice Department and the FBI today said Megaupload.com and other related sites allegedly generated more than US$175 million (NZ$217m) in criminal proceeds and caused copyright holders more than US$500m in lost revenue from pirated films and other content.
The founder of the site, millionaire Kim Dotcom - aka Kim Schmitz and Kim Tim Jim Vestor - 37, and Bram van der Kolk, 29, from the Netherlands, were New Zealand residents.
The pair, along with Finn Batato, 38, and Mathias Ortmann, 40, both from Germany, were arrested by Organised and Financial Crime Agency New Zealand (OFCANZ) and New Zealand police, who executed provisional arrest warrants requested by US authorities.
Police said the four people were arrested at addresses in Coatesville and Orakei, and a total of 10 search warrants were executed across Auckland.
Assets, including luxury cars with an estimated total value of up to NZ$6m, were seized. These included a Rolls Royce Phantom Drophead Coupe valued at over NZ$500,000.
Over NZ$10m has also been seized from NZ financial institutions, which have been secured by New Zealand's Official Assignee pending the outcome of legal proceedings.
Julius Bencko, 35, from Slovakia, Sven Echternach, 39, from Germany and Andrus Nomm, 32, from Estonia remained at large.
Detective Inspector Grant Wormald, of OFCANZ, said today's arrests were the result of several months' coordination with the FBI and US Department of Justice.
"The FBI contacted New Zealand police in early 2011 with a request to assist with their investigation into the Mega conspiracy," Wormald said.
"We were happy to provide this assistance. Staff from OFCANZ and New Zealand police have worked with the US authorities over recent months to effect today's successful operation.
"All the accused have been indicted in the United States. We will continue to work with the US authorities to assist with the extradition proceedings," he said.
The individuals and two corporations - Megaupload Limited and Vestor Limited - were indicted by a grand jury in the Eastern District of Virginia on January 5.
The members of the group, known as the "Mega Conspiracy", each face a maximum penalty of 20 years in prison on the charge of conspiracy to commit racketeering, five years in prison on the charge of conspiracy to commit copyright infringement, 20 years in prison on the charge of conspiracy to commit money laundering and five years in prison on each of the substantive charges of criminal copyright infringement.
Law enforcement agencies worldwide also executed more than 20 search warrants in the United States and seven other countries.
Megaupload.com has said it is diligent in responding to complaints about pirated material.
Dotcom, who was also the sole shareholder of Vestor Limited, wanted to become a New Zealand citizen and was given residency despite two convictions, which he said were wiped clean in his home country of Germany.
He wanted to buy a luxury mansion in north Auckland, but his application was denied by Association Finance Minister Simon Power and Land Information Minister Maurice Williamson last year as he did not meet the "good character" test to buy land.
His arrest comes one day after websites shut down in protest of two congressional proposals intended to thwart the online piracy of copyrighted movies and TV programmes.
Hackers from internet collective Anonymous have reportedly broken several websites in retaliation.
The websites for the Recording Industry Association of America, the Motion Picture Association of America, and Universal Music Group have all gone down, with some returning and some remaining inaccessible.
Twitter accounts associated with the group tweeted about the hacks.