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Megaupload founder denied bail

By the CNN Wire Staff
updated 6:49 AM EST, Wed January 25, 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
  • Kim Dotcom to remain in custody at least until February 22
  • U.S. authorities shut down Megaupload last week
  • They accuse the website of pirating copyrighted works
  • Dotcom's lawyer says he is innocent

(CNN) -- A New Zealand court denied bail Wednesday to the founder of the shuttered file-sharing site Megaupload, whose extradition is being sought by the U.S. Department of Justice.

Kim Dotcom, who is also known as Kim Schmitz, will remain in custody until at least February 22, when an extradition hearing is to be held, the court said.

U.S. authorities shut down Megaupload last week and announced indictments against Dotcom and six other 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, including Dotcom, were arrested in New Zealand at the request of the U.S. government. The New Zealand police detained Dotcom, a German citizen, on Friday after a raid on his mansion in the North Shore area of Auckland, the country's largest city.

Feds shut down Megaupload website

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

"Mr. Dotcom emphatically denies any criminal misconduct or wrongdoing and denies the existence of any 'mega-conspiracy,'" Davison told the court.

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

 \
"Dotcom Mansion" in Auckland, New Zealand, where four men were arrested Friday in connection with Megaupload.

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

Davison said this week that, without access to his assets or travel documents, Dotcom did not present a flight risk. He added 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."

CNN's Karen Smith contributed to this story

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