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Megaupload Gets Busted; File Sharers Are Frazzled

Techies say Megaupload arrests may harm entrepreneurs, investors

If Hollywood needed to cast a villain for a movie about the fight against online piracy, it couldn’t have done a whole lot better than Kim Dotcom. The German computer programmer and founder of the online file storage service Megaupload lived larger than a James Bond foe. Dotcom, who legally changed his name from Kim Schmitz, lived in a $24 million mansion outside Auckland, New Zealand, and drove luxury cars with license plates that read “Mafia” and “Guilty.” The former hacker was convicted in the early 2000s in connection with one of the largest insider-trading scandals in Germany.

Now he’s in legal trouble again. On Jan. 20, New Zealand police arrested Dotcom with three co-workers as part of what could be the biggest criminal copyright infringement case ever. U.S. authorities have accused the four of willfully and repeatedly violating copyright law, alleging that executives knew of the illicit content on their servers and paid users who uploaded it. The New Zealand police say they found Dotcom in the mansion’s panic room with a shotgun at his side. Dotcom was denied bail on Jan. 25, although his lawyers are appealing, and faces extradition to the U.S. He could not be reached for comment.