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Megaupload founder appears in New Zealand court seeking bail

By Jethro Mullen, CNN
updated 3:32 AM EST, Mon January 23, 2012
This TV grab shows internet guru and Megaupload founder Kim Schmitz, far right, at an Auckland, New Zealand, court Friday.
This TV grab shows internet guru and Megaupload founder Kim Schmitz, far right, at an Auckland, New Zealand, court Friday.
STORY HIGHLIGHTS
  • The U.S. shut down Megaupload and announced indictments against seven people
  • The site's founder, Kim Dotcom, and three others appear before a New Zealand court
  • Dotcom's lawyer says his client denies the charges, criticizing the authorities' approach
  • Prosecutors say Dotcom presents an "extreme" flight risk and should not be granted bail

(CNN) -- The founder of the shuttered file-sharing site Megaupload appeared in a New Zealand court Monday, as the U.S. Department of Justice seeks to extradite him and other company officials on criminal charges. But his lawyer insisted his client is innocent.

The U.S. authorities shut down Megaupload last week and announced indictments against seven people connected to the site, accusing them of operating an "international organized criminal enterprise responsible for massive worldwide online piracy of copyrighted works."

Four of those charged were arrested in New Zealand at the request of the U.S. government. They included Kim Dotcom, the site's founder, who is also known as Kim Schmitz. The New Zealand police detained Dotcom, a German citizen, on Friday after a dramatic raid on his luxury mansion in the affluent North Shore area of Auckland, the country's largest city.

In a packed court on Monday, Dotcom's lawyer, Paul Davison, argued that his client was innocent and should be granted bail.

"Mr. Dotcom emphatically denies any criminal misconduct or wrongdoing and denies the existence of any 'mega-conspiracy,'" Davison said in the North Shore District Court.

But the New Zealand government prosecutors, acting on behalf of the U.S. authorities, argued that Dotcom's bail request should be denied because he presented an "extreme" flight risk. Dotcom is a resident of both New Zealand and Hong Kong.

Anne Toohey, the prosecuting lawyer, said Dotcom had chartered private planes, helicopters and yachts in the past.

"This kind of access to private transportation is a significant issue in terms of flight," she told the court.

Megaupload, which traffic-tracking service Alexa ranked as the world's 72nd most visited website before it was taken down, allowed users to share and download files -- many of which were copyrighted works made available for download without permission, according to the U.S. authorities.

They said the operation had generated more than $175 million in illegal profits through advertising revenue and the sale of premium memberships. Authorities have seized the company's servers and domain names and frozen $50 million in assets.

Among the company's assets were 18 luxury vehicles seized by the New Zealand police in the raid on Dotcom's mansion, including several top-end Mercedes, a Rolls Royce Phantom and a 1959 pink Cadillac.

Davison said that without access to his assets or travel documents, Dotcom did not present a realistic flight risk. He also noted that his client wanted to stay in New Zealand with his pregnant wife and children.

He criticized the "aggressive" approach taken by the police and prosecutors in accusing and detaining Dotcom, saying it had "amplified the nature and gravity of this alleged offending beyond any reality."

He suggested it had created "a real misunderstanding and misconception of the business of Megaupload."

The judge at the hearing reserved his decision on the bail request for Dotcom and the other Megaupload officials -- Finn Batato, Mathias Ortmann and Bram van der Kolk -- until Tuesday or Wednesday.

Despite the charges against him, Dotcom appeared "really calm" in court, said Emma Brannam, a reporter for TV3 New Zealand, who attended the proceedings. He remained quiet during the hearing and didn't turn to look at the dozens of Megaupload supporters who were watching from the public gallery, she said.

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