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Dotcom Accused of Crimes Nonexistent Under U.S. Law, Lawyers Say

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Megaupload Founder Kim Dotcom
Kim Dotcom, founder of Megaupload.com. Dotcom and Megaupload were indicted in Virginia because they leased servers in the state. Photographer Brendon O'Hagan/Bloomberg

May 8 (Bloomberg) -- The U.S. is accusing Kim Dotcom, the founder of the cloud-storage service Megaupload.com, of crimes that don’t exist under U.S. law, his lawyers said.

Dotcom, 39, was indicted in January last year in Virginia on charges of racketeering, money laundering, copyright infringement and wire fraud through the website. The Internet entrepreneur is scheduled in August to face an extradition hearing to the U.S. from New Zealand, where he is a resident.

“The United States has charged Kim Dotcom with criminal liability for the acts of his Megaupload cloud storage users, a form of secondary copyright infringement,” according to a statement from Dotcom’s attorneys. “But no criminal statute for secondary copyright infringement exists.”

The statement and a white paper from Dotcom’s lawyers Robert Amsterdam and Ira Rothken, were released to coincide with a meeting today in Auckland of attorneys general from the U.S., Canada, Australia, England and New Zealand.

Eric Holder, the U.S. attorney general, and his foreign counterparts are also scheduled to meet with the Strategic Alliance Group. The group comprises the five countries’ federal policing agencies: the U.S. Federal Bureau of Investigation, Australian Federal Police, the U.K. Serious Organised Crime Agency, New Zealand Police and Royal Canadian Mounted Police.

The attorneys general and agencies will discuss the Megaupload case, according to Michael Gillies Smith, a spokesman for Dotcom.

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The U.S. is accusing Dotcom of running the website to profit from piracy and is fighting Megaupload’s attempt to have the case thrown out in Virginia.

A dismissal “would harm (perhaps fatally) the government’s ability to fully prosecute serious criminal conduct of the corporate defendant Megaupload, the ability of victims to obtain justice, and the public’s interest in resolving the case efficiently,” U.S. Attorney Neil H. MacBride said in a filing May 2.

Dotcom and Megaupload were indicted in Virginia because they leased servers in the state. MacBride has said that was enough to go ahead with a seizure of Megaupload’s servers and Dotcom’s assets.

The U.S. government’s attack on Megaupload and Dotcom is largely influenced by the Motion Picture Association of America, which is headed by former Senator Chris Dodd and is a major campaign contributor to the Democrats, Amsterdam and Rothken wrote in their report.

The New Zealand case is between Kim Dotcom and Attorney General. CIV2012-404-001928. High Court of New Zealand (Auckland). The U.S. case is: USA v. Dotcom. 12-cr-00003. U.S. District Court for the Eastern District of Virginia (Alexandria).

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net

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